After postponing plans to file for an initial public offering earlier this year in the wake of the coronavirus pandemic, Airbnb yesterday announced it has confidentially filed with the Securities and Exchange Commission to go public. It has not yet decided on the proposed share price and the number of shares to be offered.
“The move underscores a rebound in parts of the travel industry, which was battered this year by restrictions and shutdowns due to the COVID-19 pandemic. San Francisco-based Airbnb said in July that customers had booked more than 1 million nights in a single day for the first time since March 3, in part as U.S. travelers shy away from hotels and prefer to drive to local vacation rentals,” write Reuters’ Anirban Sen and Joshua Franklin.
“Independent data from AirDNA suggested that in June, Airbnb bookings in rural areas were up by 25% compared to the same month in 2019. However, its more profitable urban markets, such as Boston, Los Angeles and New York, were still well down,” Miles Kruppa and Dave Lee write for Financial Times.
“‘They’re definitely seeing a recovery,’ said Charuta Fadnis, travel industry analyst with Phocuswright. ‘But I think they face the same issues as every other travel company, there are so many uncertainties. Business travel will definitely be impacted and isn’t coming back any time soon,’” they add.
“The company now says it has 7 million listings on its site in more than 220 countries and regions. It has expanded to include activities and adventures in many cities and is a popular vacation tool. But it has also faced strife with local municipalities, many of which have accused the company of driving up housing costs by encouraging people to list their properties as short-term rentals,” Rachel Lerman points out for The Washington Post.
“The trajectory that Airbnb would’ve seen had we not been in the midst of a pandemic would’ve been so much more impressive,” Arun Sundararajan, a professor at New York University’s Stern School of Business, tells Bloomberg’s Olivia Carville and Crystal Tse. “Against the odds, it appears the stock market is still receptive to tech IPOs.”
“While it’s risky for any company in the travel industry to be going public this year, there’s growing evidence investors think tech platforms are going to control a larger portion of the economy, Sundararajan said,” Carville and Tse add.
“Airbnb joins a rush of companies tapping public investors after the IPO market emerged from a virtual standstill triggered by the coronavirus pandemic. Still, its offering will test the public markets, particularly amid increased wariness for money-losing startups. Chief executive Brian Chesky is under pressure from employees to list this year because many valuable stock options are set to expire,” Preetika Rana writes for The Wall Street Journal.
“Founded in 2008 after the company’s co-founders began renting guests an air mattress in their downtown San Francisco apartment, Airbnb grew into one of the most highly valued startups over the last decade. It was privately valued at more than $30 billion in 2017 and earned $4.8 billion in revenue last year, according to financial statements reviewed by the Journal,” Rana continues.
“But its administrative costs also soared in recent years as it spent big on a trendy corporate headquarters and struggled to police crime and safety in its rental homes. That led the company to post a net loss for the first nine months of 2019, down from a profit in the same period a year earlier,” Rana adds.
“Airbnb’s initial public offering plan shows the resilience of the tech industry in the pandemic and an investor appetite for tech stocks, said Ted Smith, president of Union Square Advisors, a tech-focused financial advisory firm,” Erin Griffith writes for The New York Times.
“‘There’s going to be some choppiness in the short term until we get through the pandemic,' he said. 'But I think it mirrors the overall faith that the market seems to have in the long term.’
“Start-ups have taken advantage of the excitement for technology. Tech companies including Lemonade, an insurance provider, and ZoomInfo, a business database company, watched their prices soar after listing over the summer,” Griffith adds.
Uh huh. But then there’s We Work, Uber and Lyft.