09/17/2020

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Airbnb Makes Plans to File for an IPO



A Highly Anticipated Offering

Airbnb could be getting close to a long-awaited public debut. The home-sharing company has said it will file IPO paperwork with the SEC later this month. Though nothing is guaranteed, this move could mean that Airbnb’s shares will begin trading by the end of the year. Morgan Stanley (MS) has been asked to lead the offering, with help from Goldman Sachs (GS).

Airbnb is the biggest home-sharing service in the US, and a cornerstone of the sharing economy. It began in 2008 and became one of the world’s most highly valued startups in 2017 at $31 billion. In April 2020, Airbnb was valued at $18 billion—down almost 50% from the company’s 2017 valuation.

Airbnb’s Ups and Downs

The ongoing COVID-19 pandemic has battered Airbnb, along with the rest of the travel industry. The company was looking to file IPO paperwork in March, but put plans on hold as its bookings and revenue sank. Airbnb laid off about 25% of its workforce and scrambled to secure funding at high interest rates from private equity firms.

However, Airbnb’s bookings have recovered surprisingly quickly. The company reported that on July 8, customers around the world reserved over 1 million nights of future Airbnb stays—the highest level since March 3.

Some of this rebound has been driven by customers looking to escape urban areas for longer periods of time. As many companies have stayed remote through the summer, people have the option to move far away from their offices, and many are using Airbnb to do so. Data shows that the average length of stays booked on Airbnb has increased by 18% between January 2020 and June 2020. Additionally, Airbnb stays in rural areas of the US generated 25% more revenue for hosts in June 2020 than a year prior.

IPO Conditions Could Be Favorable

The IPO market ground to a halt when the pandemic first hit the US, but since then a number of companies, including Lemonade (LMND) and Warner Music Group (WMG), have had successful public debuts. DoorDash and Palantir Technologies are planning IPOs and could begin trading in a matter of weeks.

On average, IPOs have surged by 23% in their first day of trading in 2020—the highest day-one average spike since 2000. Though Airbnb has seen its fair share of difficulties this year, it may end 2020 by finally making its public debut.


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