Airbnb has begun the process of filing for an IPO amid financial difficulties it has faced as a result of Covid-19.
After a number of years of speculation and planning, Airbnb has confirmed that it is beginning the process of filing to go public. In a brief statement yesterday (19 August), the company said it had confidentially submitted a draft registration statement to the US Securities and Exchange Commission (SEC) relating to the proposed initial public offering (IPO).
“The number of shares to be offered and the price range for the proposed offering have not yet been determined,” it said. “The IPO is expected to take place after the SEC completes its review process, subject to market and other conditions.”
In 2017, Airbnb CEO Brian Chesky said his company was halfway through a two-year plan to go public, while the company said in September 2019 that it expected to become a publicly traded company “during 2020”.
But the Covid-19 pandemic has been a major blow to the company’s stability and finances. In April, Airbnb announced that it had secured a total of $2bn in two separate financing deals and had reportedly shelved plans to go public later this year. It was valued that month at $18bn, almost half of what it was worth in 2017.
Data revealed in March showed the company’s year-on-year bookings were down 95pc in Asia, 75pc in Europe and 50pc in the US. A fund of $250m was set aside for Airbnb hosts to help cover the cost of cancellations due to the pandemic, as well as a $10m fund for ‘superhosts’.
Travel in a new world
In May, Chesky confirmed that 25pc of Airbnb’s staff would need to be let go, amounting to nearly 1,900 people. In a blog post, he admitted that revenues had been “hit hard” as a result of the pandemic, with this year’s revenue set to be half of what the company achieved in 2019.
“Travel in this new world will look different, and we need to evolve Airbnb accordingly,” Chesky said at the time.
“While we know Airbnb’s business will fully recover, the changes it will undergo are not temporary or short lived. Because of this, we need to make more fundamental changes to Airbnb by reducing the size of our workforce around a more focused business strategy.”
Despite the challenges of Covid-19, short-term rental bookings in rural areas of the US on Airbnb have reportedly increased by 25pc in June compared with the same month in 2019. However, bookings in major urban centres that make up a significant part of its business are still suffering as a result of the pandemic.