Airbnb reportedly plans to confidentially file for an IPO later this month
- Airbnb is reportedly planning to confidentially file its initial public offering paperwork later this month.
- The company had previously planned to go public this year, but postponed the effort when the onset of the coronavirus crisis crushed its business.
- Airbnb's business has started to rebound in recent months.
- The company is under pressure to go public this year, because some of the stock options held by some of its earliest employees are set to expire later this year if they aren't exercised.
In the course of a few months, Airbnb's initial public offering plans have gone from completely off the rails to apparently solidly back on track.
The online travel giant plans to confidentially file its IPO paperwork later this month, The Wall Street Journal reported Tuesday. The move could set in motion its long-awaited public markets debut with a potential IPO before the end of the year.
An Airbnb representative declined to comment on the report.
Airbnb had previously been preparing for an IPO this year, but halted the efforts this spring when the onset of the coronavirus pandemic crushed the stock market and shut down travel worldwide, cratering its business. Company CEO Brian Chesky warned that thanks to the epidemic, Airbnb expected its revenue for this year to be less than half what it was last year. To shore up its operations and its cash balance, the company laid off 25% of its staff and hundreds of contract workers, froze its marketing spending, and borrowed $2 billion.
As part of its debt financing, the company agreed to have its valuation slashed from $31 billion to $18 billion.
But Airbnb — along with the stock market — has rebounded in recent months as people have started to take vacations to traditional holiday spots near their homes. By late May, the number of vacation rental bookings — Airbnb's core market — had rebounded by 127% from the nadir the market hit in early April. Meanwhile, Airbnb reported its customers booked 1 million nights worth of reservations on July 8, which marked the first time the company had seen that volume of bookings since March 3. With that kind of wind at his back, Chesky told employees last month that the company had resumed its preparations for an IPO.
Still, it remains to be seen just how much of its business has returned and how public investors will value the company. Even before the pandemic, Airbnb was losing significant amounts of money. Last year, it reportedly lost $674 million on some $4.8 billion in sales.
Airbnb is under some pressure to go public this year. Some of its earliest employees hold stock options that will expire later this year if they are not exercised before then. Options generally can't be exercised unless there's a public market for a company's stock.
It's unclear what method Airbnb will use to go public. Prior to the pandemic, the company was widely reported to be considering going out with a direct listing, a method that is less costly but doesn't allow the company using it to raise money. It's possible Airbnb instead will use the traditional IPO path, which will allow the company itself to raise new cash by selling shares to the public.
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- Read more about Airbnb:
- Airbnb unfroze its IPO plans thanks to bookings rebound, but the $18 billion startup has built its comeback on very thin ice
- Airbnb told employees it's resuming plans to go public as business slowly bounces back
- These are the 19 Airbnb execs rebuilding the company for growth and an IPO amid the biggest travel industry crisis in decades
- Airbnb's path to recovery is sending it on a collision course with vacation rental giant VRBO