BREAKING: Airbnb confidentially files for IPO

(Reuters) – Short-term home rental company Airbnb Inc said on Wednesday it has confidentially filed for an initial public offering with the top U.S. securities regulator.

It would be recalled that the company had as at last week hinted that it will file IPO paperwork with the Securities and Exchange Commission later this month, laying the groundwork for a potential listing before the end of the year, according to people familiar with the matter. Morgan Stanley has been tapped to lead the offering, with Goldman Sachs Group Inc. also playing a key role, the people said.

There is no guarantee Airbnb will move forward on the expected timeline, in part because of the notorious volatility of the new-issue market.

The long-awaited move will bring one of the stalwarts of the sharing economy into the public domain, alongside ride-sharing platforms Uber Technologies Inc. and Lyft Inc., and sets up the next few months to be an especially busy time for big IPOs. Airbnb was recently valued at $18 billion, down from an earlier valuation of $31 billion.

San Francisco-based Airbnb, the largest home-sharing platform in the U.S., joins a rush of companies tapping public investors after the IPO market emerged from a virtual standstill triggered by the coronavirus pandemic. Music label Warner Music Group Corp. and insurance startup Lemonade Inc. staged successful debuts in June and July, and shares of food-delivery startup DoorDash Inc. and data-analytics firm Palantir Technologies Inc. are both expected to start trading later this summer or in the early fall.

An imminent debut would also mark a turnaround for Airbnb, which was founded in 2008 and allows people to list their homes for rent. For years, the company shied away from the public markets as it grew into one of the most-highly valued startups, with $4.8 billion in revenue in 2019.

It spent big, however, prompting it to swing to a loss in the first nine months of 2019 compared with a $200 million profit a year earlier, The Wall Street Journal reported. Its woes deepened late last year after issues emerged involving crime and safety problems on its platform.

As the pandemic spread across the globe, so did the company’s headaches. People stopped traveling, causing bookings to plummet. Airbnb, three years ago valued at more than $30 billion, rushed to secure financing from private-equity firms Silver Lake and Sixth Street Partners at a high interest rate—and with warrants that when exercised would value the company at $18 billion. In May, Airbnb said it would lay off a quarter of its staff.

Chief Executive Brian Chesky said in an interview in April that the company was working to file IPO paperwork with the SEC in March but the coronavirus’ impact on global travel quashed those plans.

Since spring, however, the rebound for Airbnb has been surprisingly swift. Even as people stayed closer to home, they still sought rental-home bookings. On July 8, guests booked more than 1 million nights’ worth of future stays at Airbnb listings around the world, the company said. It was the first time to hit that level since March 3.

If Airbnb makes its debut in 2020, it could do so in one of the most hospitable markets for IPOs in years. U.S.-listed IPOs have raised more than $60 billion so far in 2020, according to Dealogic, on track for the highest level since the tech boom in 2000. On average, these IPOs have risen 23% in their first day of trading, the biggest first-day pop since 2000.

Airbnb was supposed to be the hottest public offering of 2020. Instead, the home-sharing giant just cut 25% of its workforce and expects revenue to be less than half of what it was in 2019. WSJ’s Preetika Rana explains what made the company so vulnerable. PHOTO: Stephanie Swart for the Wall Street Journal (Originally published May 18, 2020)

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