Home-share unicorn Airbnb Inc has filed confidentially for an initial public offering with the Securities and Exchange Commission. The vacation rental online marketplace company which was once valued at $31 billion is recently valued at $18 billion. Here’s what you need to know about the IPO.
Airbnb is not currently profitable.
Bloomberg reported that Airbnb generated $4.8 billion in revenue last year, and claimed it was profitable on an EBIDTA (earnings before interest, taxes, depreciation, and amortization) basis in 2017 and 2018. Bloomberg also reported that Airbnb lost a whopping $322 million during the first nine months of 2019, which sets them down from a $200 million profit a year earlier. The pandemic has created even more ground to make up. During the second quarter, revenue dropped 67 percent year-over-year to $335 million. First-quarter sales were $842 million.
Travel is increasing.
Airbnb lost $1 billion in bookings driven by the global travel shutdown, and in May, the company laid off 25% of its staff. But in the wake of the COVID-19 pandemic, more and more people began booking local travel. “People, after having been stuck in their homes for a few months, do want to get out of their houses; that’s really, really clear,” Airbnb Inc. Chief Executive Officer Brian Chesky said in an interview in June. “But they don’t necessarily want to get on an airplane and are not yet comfortable leaving their countries.” Judging from the statistics, it appears that many travelers still prefer a short-term rental over a hotel. The New York Times reported that gross bookings in June and July rose to last year’s levels.
It’s good timing.
Airbnb had been facing pressure from eager early employees whose stock options are set to expire this coming fall, the New York Times reported. But the stock market is up “The love for technology stocks grew as the favorite pandemic plays,” reported Bloomberg, quoting Ed Moya, senior market analyst at Oanda. “No one wants to short this market, so we are seeing investors just rotate back into technology stocks today.” Bloomberg also reported that “Zoom Video Communications Inc. surged after Morgan Stanley boosted its price target for the video-conferencing company. Uber Technologies Inc. and Lyft Inc. climbed after being spared from having to rapidly convert their California drivers to employees.”
“We believe that investors are willing to look beyond COVID issues and value companies based upon post-COVID scenarios. It’s a constructive IPO market,” said Kathleen Smith, principal at Renaissance Capital, a provider of institutional research and IPO ETFs.