“According to Bloomberg, the online rental firm has been towards an IPO and was looking to start the process by March or April.”
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With 2019 turning out to be a big year for IPOs in USA, Airbnb is expected to go public in 2020. Last year USA had a disappointing run of IPO. Like many big tech startups, Airbnb have remained private for over a decade now but unlike them it makes profits. The company claimed that they were profitable on EBITDA basis in both 2017 and 2018. In 2019-2020 Airbnb reported losses of $322 million in the first 9 months of the year, after a profit of $200 million the previous year. Being a private company Airbnb has no obligation to disclose their financial details but they did so to show why they had losses in 2109-20. They have invested heavily in Acquisitions, R&D and marketing as they were planning to go public in 2020. They started updating their platform and improve their quality of services.
So these losses were not going to hamper Airbnb while going public as they have a strong business model that will attract the investors but the major concern for Airbnb is the global pandemic that have hit the globe heavily i.e., COVID-19.
Impact of COVID-19 on AIRBNB
The industries that are most effected by COVID-19 are tourism and aviation industry. This makes a huge impact on Airbnb as when people won’t travel around there would be no bookings and no bookings will lead to no revenue for the company. The virus has already led the company to close bookings in Beijing, one of Airbnb’s most valuable markets and epicenter of the virus. The investors are losing their money in the market everyday since WHO declared COVID-19 as pandemic. So the investors won’t be in the mood to invest in a company that is highly affected by the COVID-19.
David Hsu, business professor at University of Pennsylvania’s Wharton Business School, told: “You want to come in with your best foot forward in a public listing – and this virus is hitting Airbnb hard.”
Airbnb spokesman Nick Papas told Bloomberg: “Although nobody can know the extent of the impact that the coronavirus outbreak may have, we believe that history shows that when global disruptions happen, the travel industry has bounced back in the long run.”
So as the COVID-19 has impacted Airbnb indirectly and massively and the company plans to start the initial public offering [IPO] process appear to have been indefinitely placed on hold. It may consider waiting for a more opportune moment to go public.
So for now Airbnb have to postpone their IPO process and potentially postpone it to 2021.
Curious to know how Airbnb performed post-IPO?
