Airbnb has been meaning to go public for a while now but the Coronavirus outbreak put a damper on their plans at the beginning of 2020. Last August, the US-based holiday rental portal filed for IPO with the US Securities and Exchange Commission (SEC) and it is expected that Airbnb will go public in december 2020.
COVID-19 postponed Airbnb’s IPO
It was originally expected that Airbnb would be listed in 2019 but in September last year, this new venture was postponed to some unknown date in 2020. In the meantime, the world was hit by the COVID-19 pandemic. During that period, Airbnb received massive criticism from professional hosts and homeowners alike who felt abandoned by the world’s biggest holiday rental platform. As a result, Airbnb’s CEO Brian Chesky felt compelled to issue an official apology to the hosts; it would appear that he has gotten his business under control.
Airbnb due to go public on NASDAQ before Christmas
Experts believe that the Airbnb IPO will be taking place this year between Thanksgiving (November 26th) and Christmas Day (December 25th). It is expected that they will raise capital of up to $ 3 billion and Airbnb is likely to go out with a market value of $ 30 billion. One thing that is sure is that the Airbnb IPO is going to generate enormous interest from the public.
Airbnb financially afflicted by the Coronavirus
Like everyone else in the travel industry, Airbnb has also been badly affected by the COVID-19 outbreak. As a result, they’ve had to dramatically cut down its workforce and even had to find some $2 billion to overcome the crisis. The number of bookings dropped significantly in March, and in the midst of summer, August, the number of booked nights fell by 41.3% compared to August 2019. What is remarkable, and paramount for the Airbnb IPO, is that the actual number of active holiday homes on the site has remained largely unchanged. This means that somehow they have managed to retain the same number of listed inventory despite the devastating impact of COVID-19.
The main markets for Airbnb
Airbnb is a huge business well known worldwide. Their primary niche market is based in North America, their secondary one in Europe. The COVID-19 pandemic is still a major problem worldwide, but while the economy in Europe is still largely stagnant, the US economy has improved and somehow Airbnb has managed to get back on track in the US. Both the first and second quarters of 2020 were financially bad for Airbnb, while in the third quarter, they managed to break the curve and are on their way up again.
Is it worth investing in Airbnb?
The single most important problem that Airbnb faces in the short run is based purely on when the world will be able to control the coronavirus pandemic. At the time of writing, there are two vaccines on the way and it is to be expected that many people may start traveling again in late spring or early summer of 2021. The second problem that Airbnb is facing right now is government-related regulation, i.e. in case local authorities decide to ban or set restrictions on short-term rentals, as it has happened in certain cities such as Copenhagen, Berlin among others. Last but not least, Airbnb has to share a part of the market with three major competitors: Booking.com, Expedia and Tripadvisor. These three competitors also offer hotel accommodation and therefore are able to do some cross-selling between traditional accommodation and holiday apartments. Up until now, Airbnb has not gotten involved in the hotel industry. Many experts believe that this could become an issue for Airbnb in the long run. But all in all, I would still think that it sounds like a good investment when Airbnb go public in December 2020.