Airbnb’s decision to go public comes at a time when U.S. capital markets are in the middle of a stunning recovery. Many believe that 2020 is one of the best years for public market debuts in decades.
Airbnb Inc, a peer-to-peer marketplace connecting travelers with local property owners, has announced its filing with the U.S. Securities and Exchange Commission (SEC) to go public. According to Airbnb, the initial public offering (IPO) will take place after the SEC completes its review process subject to market and other conditions.
Registration Statement on Form S-1 to SEC relating to the initial public offering of Airbnb common stock has been filed confidentially. The number of shares and the price range for the offering are not yet clear. The company has also declined to say when it will go through with the offering. But according to those familiar with the matter, Airbnb is targeting a listing before the end of the year. Morgan Stanley (NYSE: MS) and Goldman Sachs Group Inc (NYSE: GS) are lead advisers on the IPO.
Is 2020 the Best Time for Airbnb to Go for IPO?
Founded in 2008, San Francisco-based Airbnb is one of the most valuable private startups in the world with a valuation of $31 billion at one point. It allows individuals to rent out rooms in their homes for travelers. Back in 2017 and 2018, the company reported extremely high profits. At the beginning of this year, many expected it to go public. However, because of the coronavirus pandemic, Airbnb delayed the IPO plan.
In May, Airbnb CEO Brian Chesky wrote in a letter to employees that COVID-19 “hit hard” the company’s business. Besides, he noted that the 2020 revenue would be less than half of what the company earned in 2019. Chesky also announced that Airbnb would let about 1,900 employees worldwide go.
Because of the pandemic, Airbnb also froze its marketing budget and took on $2 billion in debt. As part of its debt financing, the company agreed to decrease its valuation from $31 billion to $18 billion.
In June, Chesky said that despite the downturn, he was open to making a Wall Street debut happen:
“It’s not off the table, but we’re definitely not committing to anything right now. We’re going to keep our options open.”
Later, in July, Airbnb said its customers had booked more than 1 million nights in a single day for the first time since March. This was partly due to the switch of U.S. travelers from hotels to local vacation rentals.
Airbnb’s decision to go public comes at a time when U.S. capital markets are in the middle of a stunning recovery. Many believe that 2020 is one of the best years for public market debuts in decades.