Airbnb Files for IPO Disclosing Pandemic’s Effect on Rentals

Airbnb Inc., in a long-awaited filing for an initial public offering, outlined widening losses and plunging revenue while projecting optimism for a rebound in demand for home-sharing when the economy eventually recovers from the pandemic.

The listing is set to be one of the biggest this year, capping an IPO surge that has largely defied the economic devastation inflicted by the coronavirus pandemic.

The company’s filing Monday confirms the damage it suffered as the pandemic wreaked havoc on the travel industry. Its gross booking value for the nine months ended Sept. 30 tumbled to $18 billion, down almost 40% from the same period last year, it said.

Airbnb had a net loss of $697 million on revenue of $2.5 billion for that nine-month period, compared with a net loss of $323 million on revenue of $3.7 billion for the same period last year, according to the filing.

The San Francisco-based home rental platform listed the size of the offering as $1 billion, a placeholder that will change as its bankers test demand for the shares. The number of shares to be sold and their proposed price range will be disclosed in a later filing. People familiar with the company’s plans have said it will seek to raise as much as $3 billion in an IPO in December.

Third-Quarter Rebound

After its business was throttled by the pandemic in March, Airbnb’s bookings bottomed out in April, plummeting 72% from the previous year. In May, it said it was cutting its full-time employee headcount by about 25%. By June, bookings were down just 21% year-over-year.

After a rough second quarter, a surge in people taking near-home vacations elevated the third quarter to Airbnb’s most profitable ever on the basis of earnings before interest, taxes, depreciation and amortization. It reported $501 million in income on an adjusted Ebitda basis, a big swing from the $400 million loss in the second quarter.

Still, Airbnb’s revenue for the third quarter was $1.3 billion, down 18% from the same period in 2019, according to the filing.

Airbnb, though, has weathered the travel slump better than its competitors:Booking Holdings Inc.’s revenue in the third quarter was down 48%, andExpedia Group Inc.’s was down 58%.

Lead Underwriters

Airbnb’s offering will be led byMorgan Stanley andGoldman Sachs Group Inc. Allen & Co.,Bank of America Corp.,Barclays Plc andCitigroup Inc. are also listed as underwriters. Airbnb plans for its shares to trade on the Nasdaq Global Select Market under the symbol ABNB.

The listing venue was a victory forNasdaq Inc. over the New York Stock Exchange. Airbnb’s listing is expected to be the biggest on Nasdaq since Facebook Inc.’s 2012 IPO.

The company’s potential valuation in an IPO can’t be precisely calculated until the proposed terms and other details are revealed in the later filing.

While Airbnb’svaluation reached $31 billion in a funding round in 2017, warrants in an April round of debt and equity securities that includedSilver Lake and Sixth Street Partners valued it at only $18 billion, Bloombergreported.

Sequoia, Founders

Airbnb’s investors included the venture capital firmSequoia, which had 16.4% of the voting power leading into the IPO. Other top investors includeFounders Fund with 5.4% andDST Global with 2.3%.

Airbnb is set to join food delivery companyDoorDash Inc., which filed Friday to go public, in a finale to what is already a record year for IPOs. Driven mostly by the proliferation of special purpose acquisition companies, or SPACs, and to a lesser extent by software companies, an all-time record of more than $141 billion has been raised on U.S. exchanges in 2020, according to data compiled by Bloomberg.

Along with Airbnb and DoorDash, online discount retailerWish Inc. and installment loans providerAffirm Inc. are expected to complete IPOs by the end of the year, people familiar with their plans have said.

— With assistance by Patrick Clark

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