Airbnb has revealed the impact of the pandemic on its business, reporting a net loss of almost $697m in the first nine months of 2020.
After months of Covid-19 restrictions devastating the travel industry across the world, Airbnb’s initial public offering (IPO) filing shows just how badly its business has been affected.
In August, the company had confirmed that it was beginning the process of filing to go public. Now, following a short delay due to the US elections, Airbnb has filed its IPO documents, revealing that it earned $2.5bn in revenue for the first nine months of 2020, a 32pc drop on the same period in 2019.
The company reported Q3 profits of more than $219m on $1.3bn in revenue. While this showed a small rebound from its Q2 net loss of more than $575m, the company’s overall net loss for the first nine months of 2020 was almost $697m.
‘Disproportionally negative effect’
The Covid-19 pandemic has been a major blow to the company’s finances. In April, Airbnb announced that it had secured a total of $2bn in two separate financing deals. Then in May, CEO Brian Chesky confirmed that 25pc of the company’s staff would need to be let go, amounting to around 1,900 people.
The IPO documents revealed that the company is still almost $2bn in debt, and that this “substantial level of indebtedness could materially adversely affect” its finances. Airbnb was valued at $18bn earlier this year, almost half of what it was worth in 2017.
Airbnb cited Covid-19 as a risk factor in its IPO filing, saying that the pandemic has had a “disproportionately negative effect on the travel industry” due to the implementation of restrictions and people’s reluctance to travel.
“In order to protect our business from these near-term market disruptions and the prospect of a prolonged business impact, we raised $2bn in the form of term loans in April 2020 and took action to dramatically reduce our operating expenses,” the company stated in its filing.
“We believe these incremental funds and our rapid management of expenses, in addition to our existing cash position, will help us to prudently manage our business through the effects of the Covid-19 pandemic.”