Airbnb prepares for IPO filing later this month

After months of speculation, Airbnb is planning to file confidentially for an IPO later this month, according to reports.

News of a potential market debut follows a dismal couple of months for Airbnb, as the pandemic thwarted plans for its much-awaited public listing. In May, the vacation rental company announced it intended to cut costs, laying off about 25% of its workforce after a pandemic-fueled global travel halt caused bookings to plummet. At the time, CEO Brian Chesky told employees in a memo that the company expected its 2020 revenue to be less than half of what it was last year.

But just two months later, things appeared to reverse course for the San Francisco-based company. On July 8, guests from around the world booked more than 1 million nights of future stays—a threshold not reached since March 3, Airbnb said. Soon after that announcement, the company reportedly revived its plans to go public, but was noncommittal about a timeline.

Three years ago, Airbnb was valued at $31 billion, according to PitchBook data. But that valuation reportedly dropped to $18 billion in April after the business secured a $1 billion debt and equity investment from Silver Lake and Sixth Street Partners.

Key Background

Airbnb’s long-awaited IPO would follow in the footsteps of other sharing economy stalwarts like Uber and Lyft. The San Francisco-based company is the largest home-sharing platform in the U.S., posting $4.8 billion in revenue in 2019. But Airbnb’s business has taken a substantial hit amid the pandemic, which has devastated the travel and hospitality industries as people were forced to stay at home under lockdown orders. To get through the crisis, Airbnb raised $1 billion in equity and debt from Silver Lake and Sixth Street Partners back in April, followed by another $1 billion from Fidelity, T. Rowe Price and Blackrock a week later.

What To Watch For

Airbnb is the latest to join a rush of companies going public amid the stock market’s rebound from its coronavirus recession low point in March. While IPOs were at a virtual standstill because of the pandemic, more companies have been looking to public investors to raise cash in recent months. Among those who have successfully done so are music label Warner Music Group and insurtech startup Lemonade. U.S.-listed IPOs have so far raised more than $60 billion in 2020, according to Dealogic, with an average gain of 23% on their first day of trading.

Source: Forbes

By Sergei Klebnikov

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