KEY POINTS
- Airbnb has released its prospectus to debut on public
markets.
- 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.
- The company said it plans to trade under the symbol “ABNB” on
the Nasdaq.
Brian Chesky, CEO of Airbnb
Airbnb on Monday released its prospectus to debut on public
markets. The company allows users to book short-term rentals and
experiences while traveling.
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 company said it plans to trade under the symbol “ABNB” on
the Nasdaq.
In its prospectus, the company put an emphasis on building a
community around its hosts and guests, positioning that community
as a differentiating factor from its competitors. The company said
it would set up 9.2 million shares of non-voting stock aside in an
endowment fund for hosts.
“Our guests are not transactions -- they are engaged,
contributing members of our community,” the company said in its
prospectus summary. “Once they become a part of Airbnb, guests
actively participate in our community, return regularly to our
platform to book again, and recommend Airbnb to others who then
join themselves. This demand encourages new hosts to join, which in
turn attracts even more guests. It is a virtuous cycle -- guests
attract hosts, and hosts attract guests.”
In 2019, the company reported a net loss of $674 million on
revenues of $4.81 billion. 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.
“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 listed
as its first risk factor.
The company lists Booking
Holdings, Expedia
Group, Google, TripAdvisor, Trivago,
Craigslist and hotel chains Marriott, Hilton and others among its competitors. The
company will have three classes of stock. Class A stock holders
will get one vote per share while class B holders, which include
the founders and early investors, will get 20 votes per share.
Class H holds no votes and is primarily for long-time hosts.
A quick bounceback from the pandemic
Airbnb has endured a tough 2020. As the coronavirus decimated
travel around the world, the company raised $2
billion in new debt funding at a valuation of $18 billion
and announced major cost-cutting initiatives, including plans
to lay off 25%
of its staff, or nearly 1,900 employees. The company also
slashed marketing costs and raised billions of dollars in debt.
The coronavirus pandemic brought the travel industry to a halt,
resulting in an estimated $443 billion of lost revenue since the
beginning of March, according to a Nov. 5
report from the U.S. Travel Association.
Airbnb rebounded, however, after a surge of
rentals in rural areas as residents with means fled
pandemic-stricken cities. The rebound began within two months
of the pandemic, the company said in its prospectus.
“In early 2020, as Covid-19 disrupted travel across
the world, Airbnb’s business declined significantly,” the company
wrote. “But within two months, our business model started to
rebound even with limited international travel, demonstrating its
resilience. People wanted to get out of their homes and yearned to
travel, but they did not want to go far or to be in crowded hotel
lobbies. Domestic travel quickly rebounded on Airbnb around the
world as millions of guests took trips closer to home. Stays of
longer than a few days started increasing as work-from-home
became work-from-any-home on Airbnb. We believe that the
lines between travel and living are blurring, and the global
pandemic has accelerated the ability to live anywhere. Our platform
has proven adaptable to serve these new ways of traveling.”
Airbnb said its number of listings has declined and may continue
to decline in part due to the pandemic. In particular, some people
rely on Airbnb to help pay living expenses or mortgages, and those
people may get knocked off the platform.
“It is not yet clear what financial impact the severe travel
reduction occurring during the Covid-19 pandemic will
have on these individuals or whether they will be able to keep
their homes or operate their businesses as travel resumes,” the
company wrote in its risk factors. “Our business, results of
operations, and financial condition could be materially adversely
affected if our hosts are unable to return to normal operations in
the near to immediate term.”
Unusually, the company has a Stakeholder Committee on its board
of directors whose mission is to consider interests of “key
stakeholders,” including guests, hosts, communities and employees.
The notion of “stakeholder
capitalism” envisions a departure from traditional business
practices which put shareholder interests first, and instead sees
business as serving many groups.
Airbnb endured numerous issues with its hosts this year since
enforcing an extenuating circumstances policy in March that
overrode hosts’ cancellation policies and claimed to offer full
refunds to guests impacted by the coronavirus pandemic.
Later, Airbnb announced it would establish a $250 million
coronavirus relief fund for hosts, returning 25% of what they would
have normally received under their cancellation policies,
but many hosts
who spoke with CNBC complained that they were not
receiving the correct amounts or any payments at all.
In November, the company was hit with a
proposed class-action lawsuit by one of its hosts,
alleging that the tech company violated its contract with hosts
when it enforced the extenuating circumstances policy.
Airbnb is #41 on the 2020 CNBC
Disruptor 50 list and the only startup to be named to
CNBC’s annual list 8 times.
Stocks on the move -
WSGF,
TSNP,
ALPP and
OPTI
Source: CNBC/ABNB - https://www.cnbc.com/2020/11/16/airbnb-s-1-ipo-filing-drops.html
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