Airbnb is forging ahead with an IPO regardless of COVID-19 and a negative financial position, planning to list on the NASDAQ exchange under the ticker ABNB.
When you consider the ongoing pandemic and the curb on travel, Airbnb going public this year might seem odd at first. The company already had to delay its IPO from a prior August date amidst cancellations and refunds, which further compromised its financial standing. Now, Airbnb is going forward with one regardless, sometime this year.
The lodgings rental firm officially filed for an IPO yesterday, noting that it will trade under the ABNB ticker on the NASDAQ exchange.
"We have incurred net losses in each year since inception, and we may not be able to achieve profitability," the company noted in its prospectus. "We incurred net losses of $70.0 million, $16.9 million, $674.3 million, and $696.9 million for the years ended December 31, 2017, 2018, and 2019, and nine months ended September 30, 2020, respectively. Our accumulated deficit was $1.4 billion and $2.1 billion as of December 31, 2019 and September 30, 2020, respectively."
According to CNBC, "The company made $219 million in net income on revenues of $1.34 billion last quarter. That was down nearly 19% from $1.65 billion in revenue a year prior. Despite primarily turning net losses, the company has had other occasional quarters of profitability, including the second and third quarters of 2018 and the third quarter of 2019."
The news site continued: "Thus far in 2020, the company has turned a net loss of nearly $697 million on revenues of $2.52 billion. The decline is likely from the impact of the coronavirus, which put the brakes on leisure and business travel earlier this year."
So far in 2020, Airbnb has sold $17.9 billion in gross bookings, a drop of 39% from the year prior, The Verge said.
"The COVID-19 pandemic and the impact of actions to mitigate the COVID-19 pandemic have materially adversely impacted and will continue to materially adversely impact our business, results of operations, and financial condition," the company said under its list of risk factors.
Vacation destinations changed and Airbnb adapted
Fortunately for the company, even if a minor silver lining in its own right, the company began seeing renewed interest and demand for bookings around summer this year, at least in the US, as people decided to turn their attention inwards for their next vacation: meaning that since people can't travel abroad, they began travelling within borders to more rural areas.
"Over the summer, after months of being stuck inside their homes, people were yearning to connect with their loved ones in a safe way," Airbnb said in the prospectus. "They decided to get in their cars and travel close to home, often staying in small towns and rural communities. Because we have millions of hosts who offer nearly all types of homes and experiences around the world, we were able to adapt to the new use cases guests wanted — from working remotely from another home, to taking extended trips with family and friends. Our business rebounded faster than anyone expected, and it showed that as the world changes, our model is able to adapt."
On the financial side of things, Airbnb has had to raise $2 billion in debt to stay afloat during pandemic. Additionally, the company had announced back in May that it would be laying off 25% of its staff, or nearly 1800 employees, as part of a restructuring plant that has cost them $137 million as of September 30th.
With positive news of a COVID-19 vaccine looking more possible within the next few 6 months, the world could soon begin making a return to normal. Maybe then Airbnb could finally attain annual profitability.