Despite damage to the home rental business caused by the coronavirus pandemic, Airbnb has resumed its plans to go public.
The company’s CEO, Brian Chesky, told employees on a video-conference call last Wednesday.
Airbnb, once valued by investors at $31 billion, had planned to go public in March. But the company set aside those plans when the pandemic halted travel around the world…
Since then, Airbnb has slashed costs, raised $1 billion in emergency funding at a $26 billion valuation, and laid off a quarter of its staff (around 1,900 people).
On that same call with employees, Chesky indicated that the company’s gross bookings rebounded in recent weeks from their nose-dive back in March when lockdowns commenced around the world.
“This is something I never would have imagined telling you,” he said in the meeting. “It kind of defies logic in a way.”
But that trend could change as lockdowns return in some parts of the United States…
Right now, Airbnb is trying to repair the relationship it has with its hosts, who supply the rentals for its platform and whose income has dried up with travel halted.
Many hosts were outraged when Airbnb allowed guests to cancel “nonrefundable bookings” as COVID-19 spread. And while some are seeing bookings return slowly, most are not…
In response to the virus, Airbnb has adapted its offerings. The company now sells access to “virtual” activities done over video streaming, for example.
Although we didn’t get an update from Cheksy, I suspect that revenue accounts for less than 5% of total sales…
No matter which way you slice it though, Airbnb is definitely under pressure from its workers to go public. That’s because shares held by early employees will begin to expire this year…
You see, since Airbnb is privately held, its shares cannot be easily traded or cashed in. So, the employees need the company to go public in order to freely sell their shares.
Tensions are certainly rising due to the pandemic and the deadline. And with an IPO the size and profile of Airbnb, the timing is everything…
Even with significant revenue lost, some analysts think Airbnb’s listing may be welcomed by investors.
But I’m not one of them.
Just today (July 21), New York, New Jersey, and Connecticut announced they’re requiring visitors from 31 states to quarantine for 14 days in an effort to combat the growing number of coronavirus cases across the country.
Since I expect more states to follow their lead, that will certainly be another blow to Airbnb’s ability to generate revenue in the near-term.
Add in a record 51 million Americans filing for employment, and the customer base for Airbnb dwindles more.
Mr. Chesky closed his most recent virtual meeting with employees saying, “We’re not committing to going public this year, but we’re not ruling it out, either. When the market is ready, we will be ready, because Airbnb was down but we were not out.”
Long-term, I don’t think Airbnb is “out” either. If the company does happen to go public later this year though, stay away for at least a couple months and watch what happens.
If the stock drops 50% to a $13 billion valuation, that could be an interesting opportunity to buy and hold it for the long-term.
Once the pandemic has ended and traveling can return to normal, Airbnb should resume its vacation rental domination.
Sources say the Airbnb IPO is likely to be valued above $20 BILLION!
But it was only worth $2.5 million when early investors first funded the company. Now they stand to rake in a staggering 799,900% profit on their early investments!
That means every $1,000 invested will be worth $8 million or more!
Investors who plunked down $10,000 in the first round will cash out with at least $80 million. And big spenders who had the foresight to invest $50,000 will walk away with no less than $400 million!
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