Airbnb Inc., in a long-awaited filing for an initial public offering, outlined widening losses and plunging revenue while projecting optimism for a rebound in demand for home-sharing when the economy eventually recovers from the pandemic.
The listing is set to be one of the biggest this year, capping an IPO surge that has largely defied the economic devastation inflicted by the coronavirus pandemic.
The company’s filing Monday confirms the damage it suffered as the pandemic wreaked havoc on the travel industry. Its gross booking value for the nine months ended Sept. 30 tumbled to US$18 billion ($24.22 billion), down almost 40% from the same period last year, it said.
Airbnb had a net loss of US$697 million on revenue of US$2.5 billion for that nine-month period, compared with a net loss of US$323 million on revenue of US$3.7 billion for the same period last year, according to the filing.
The San Francisco-based home rental platform listed the size of the offering as US$1 billion, a placeholder that will change as its bankers test demand for the shares. The number of shares to be sold and their proposed price range will be disclosed in a later filing. People familiar with the company’s plans have said it will seek to raise as much as US$3 billion in an IPO in December.
Third-Quarter Rebound
After its business was throttled by the pandemic in March, Airbnb’s bookings bottomed out in April, plummeting 72% from the previous year. In May, it said it was cutting its full-time employee headcount by about 25%. By June, bookings were down just 21% year-over-year.
After a rough second quarter, a surge in people taking near-home vacations elevated the third quarter to Airbnb’s most profitable ever on the basis of earnings before interest, taxes, depreciation and amortization. It reported US$501 million in income on an adjusted Ebitda basis, a big swing from the US$400 million loss in the second quarter.
Still, Airbnb’s revenue for the third quarter was US$1.3 billion, down 18% from the same period in 2019, according to the filing.
Airbnb, though, has weathered the travel slump better than its competitors: Booking Holdings Inc.’s revenue in the third quarter was down 48%, and Expedia Group Inc.’s was down 58%.
Lead Underwriters
Airbnb’s offering will be led by Morgan Stanley and Goldman Sachs Group Inc. Allen & Co., Bank of America Corp., Barclays Plc and Citigroup Inc. are also listed as underwriters. Airbnb plans for its shares to trade on the Nasdaq Global Select Market under the symbol ABNB.
The listing venue was a victory for Nasdaq Inc. over the New York Stock Exchange. Airbnb’s listing is expected to be the biggest on Nasdaq since Facebook Inc.’s 2012 IPO.
The company’s potential valuation in an IPO can’t be precisely calculated until the proposed terms and other details are revealed in the later filing.
While Airbnb’s valuation reached US$31 billion in a funding round in 2017, warrants in an April round of debt and equity securities that included Silver Lake and Sixth Street Partners valued it at only US$18 billion, Bloomberg reported.
Sequoia, Founders
Airbnb’s investors included the venture capital firm Sequoia, which had 16.4% of the voting power leading into the IPO. Other top investors include Founders Fund with 5.4% and DST Global with 2.3%.
Airbnb is set to join food delivery company DoorDash Inc., which filed Friday to go public, in a finale to what is already a record year for IPOs. Driven mostly by the proliferation of special purpose acquisition companies, or SPACs, and to a lesser extent by software companies, an all-time record of more than US$141 billion has been raised on US exchanges in 2020, according to data compiled by Bloomberg.
Along with Airbnb and DoorDash, online discount retailer Wish Inc. and installment loans provider Affirm Inc. are expected to complete IPOs by the end of the year, people familiar with their plans have said.
