Airbnb seeks up to $35B valuation ahead of IPO

Melody Hahm
·West Coast Correspondent
·4 min read

Airbnb said in a regulatory filing on Tuesday that it’s setting a price range of $44 to $50 for its initial public offering, which would raise up to $2.85 billion and value the company at roughly $35 billion on a fully diluted basis.

In an eagerly-awaited move, Airbnb is poised to go public before the end of the year amid a flood of technology companies tapping the markets, even as surging COVID-19 infections roil the global economy. The stock will trade on the Nasdaq under the symbol “ABNB.”

In an S-1 filing with the U.S. Securities and Exchange Commission last month, which was amended on Dec. 1, the home rental startup disclosed revenue fell 18% year-over-year last quarter. The company managed to turn a profit of $219.3 million.

Airbnb logged 2019 revenue of $4.8 billion, compared to $3.7 billion in 2018 — representing 32% year-over-year growth. The company cautioned the decline in adjusted EBITDA and free cash flow could continue.

After confidentially filing for an IPO with regulators in August, investors are finally getting a deeper look at some key disclosures the company has to make before it starts trading.

A red-hot IPO market

Airbnb, which was founded in August 2008, joins a clutch of companies going public during a year marked by tumult and uncertainty created by COVID-19.

Nevertheless, the U.S. IPO market has been red-hot, with 232 companies filing to go public — a 19% year-over-year increase from 2019, according to data from Renaissance Capital. Big names like Palantir (PLTR), Asana (ASAN), Snowflake (SNOW), Unity Software (U) have debuted this year, and DoorDash, Wish and Roblox may go public before the new year.

Small toy figures are seen in front of diplayed Airbnb logo in this illustration taken March 19, 2020. REUTERS/Dado Ruvic/Illustration
Small toy figures are seen in front of diplayed Airbnb logo in this illustration taken March 19, 2020. REUTERS/Dado Ruvic/Illustration

In October, the company created a host advisory board, which will include 15 VIP Airbnb hosts as well as an endowment fund of 9.2 million shares of Airbnb stock. Once the fund tops $1 billion, it can be disbursed for programs like emergency funds, investments into new products and grant programs for education costs, among others.

During the first few months of the pandemic, Airbnb saw bookings and revenue plummet, which led them to cut a quarter of its staff in May. With tourism around the world drying up because of the virus, Airbnb’s reservations had plummeted 70% from a year earlier.

However, early July saw a rebound, with the company logging one million booked nights in a single day — something that hadn’t happened since early March. More travelers are choosing to stay closer to their homes, opting for road trips or longer term home rentals — mostly within 300 miles of home. The dynamic has been a boon for Airbnb’s core business.

With four million hosts and 7.4 million listings across 100,000 cities around the world, Airbnb has largely bounced back, thanks to the uptick in local travel.

Prior to COVID-19, Airbnb was exploring experiences, flights and a potential media brand, as well as making a bigger investment into winning over business travelers.

The company had to moderate all investments, and take on a renewed focus on efficiency, according to a source close to the company.

“Before the pandemic, we were coming from a perspective of billions of dollars of capital in the bank. It’s there for a reason — to spend,” a person close to the company told Yahoo Finance recently.

“We wanted to spend it responsibly, but we were willing to spend and we weren’t focused on margins or profitability...the pandemic, because the timeline is not finite, no one knows how long it will last, we had to make sure we were budgeting for the worst case scenario,” the source added.

Now with slews of additional travel restrictions, the company has once again refocused on its original audience — the leisure consumer — to buoy its business going forward.

An earlier version of this post was published on Nov. 16.

Melody Hahm is Yahoo Finance’s West Coast correspondent, covering entrepreneurship, technology and culture. Follow her on Twitter @melodyhahm.

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