In 2019, BizNews reported that South Africans who had taken advantage of Airbnb to generate revenue from their homes and holiday homes were fretting about the government’s move to regulate the home-rental market. Their worry was the Tourism Amendment Bill, saying that it would devastate the industry, artificially raise prices, and infringe on ownership rights. Fast forward a year and it is fair to say Airbnb operators in this country have other things on their mind. Along with other hospitality venues, the service was shut down during the Covid-19 lockdown, and in June was excluded from the list of travel destinations allowed to reopen under advanced level three lockdown regulations. At the time the company said it had generated an estimated R8.7 billion for SA’s economy from June 2017 to May 2018. Those figures pale in comparison to the US market, where Airbnb reported $4.8 billion in revenue in 2019. The company is now preparing to go public as it rebounds from the effects of the pandemic. On July 8 alone, guests booked more than one million nights of future stays at Airbnb listings around the world, the company says. May some of that business be coming South Africa’s way soon! – Renee Moodie
Airbnb plans to file for IPO in August
By Corrie Driebusch, Maureen Farrell and Cara Lombardo
Airbnb Inc. is close to filing to go public in a move that would underscore a surprising rebound for the home-sharing giant and the IPO market.
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The company plans to file IPO paperwork with the Securities and Exchange Commission later this month, laying the groundwork for a potential listing before the end of the year, according to people familiar with the matter. Morgan Stanley has been tapped to lead the offering, with Goldman Sachs Group Inc. also playing a key role, the people said.
There is no guarantee Airbnb will move forward on the expected timeline, in part because of the uncertain timing of the SEC’s review process and since there is no telling whether stocks will still be in favour with investors by the time the company is ready to stage an offering. A listing could take different forms: The company could pursue a traditional IPO, launch a direct listing — in which no money is raised — or take advantage of the latest trend of merging with a blank-check company.
Either way, the long-awaited move will bring one of the stalwarts of the sharing economy into the public domain, alongside ride-sharing platforms Uber Technologies Inc. and Lyft Inc., and sets up the next few months to be an especially busy time for big IPOs. Airbnb was recently valued at $18 billion, down from an earlier valuation of $31 billion.
Read also: Covid-19 curses Airbnb: From money magic to misery – The Wall Street Journal
San Francisco-based Airbnb, the largest home-sharing platform in the U.S., joins a rush of companies tapping public investors after the IPO market emerged from a virtual standstill triggered by the coronavirus pandemic. Music label Warner Music Group Corp. and insurance startup Lemonade Inc. staged successful debuts in June and July, and shares of food-delivery startup DoorDash Inc. and data-analytics firm Palantir Technologies Inc. are both expected to start trading later this summer or in the early fall.
An imminent debut would also mark a turnaround for Airbnb, which was founded in 2008 and allows people to list their homes for rent. For years, the company shied away from the public markets as it grew into one of the most highly valued startups, with $4.8 billion in revenue in 2019. It spent big, however, prompting an even steeper loss in 2019 than in prior years, The Wall Street Journal reported. Its woes deepened late last year after issues emerged involving crime and safety problems on its platform.
Moving forward now carries risk
As the pandemic spread across the globe, so did the company’s headaches. People stopped travelling, causing bookings to plummet. Airbnb, three years ago valued at more than $30 billion, rushed to secure financing from private-equity firms Silver Lake and Sixth Street Partners at a high interest rate — and with warrants that when exercised would value the company at $18 billion. In May, Airbnb said it would lay off a quarter of its staff.
Chief Executive Brian Chesky said in an interview in April that the company was working to file IPO paperwork with the SEC in March but that the coronavirus’s impact on global travel quashed those plans.
Read also: Airbnb’s public enemy #1: Meet the man trying to bring down the global beast
Since spring, however, the rebound for Airbnb has been surprisingly swift. Even as people stayed closer to home, they still sought rental-home bookings. On July 8, guests booked more than one million nights of future stays at Airbnb listings around the world, the company said. It was the first time to hit that level since March 3.
Still, moving forward now carries risk, especially for a money-losing company such as Airbnb, given IPO investors’ limited tolerance for red ink. WeWork’s deep losses helped doom the office-sharing company’s attempt to go public, and Uber’s failure to turn a profit more than a year after its IPO continues to weigh on its stock.
Even Quicken Loans parent Rocket Cos., a solidly profitable company, struggled to find demand at its target valuation, and the mortgage giant priced its offering below expectations last week. The stock has risen only modestly since then.
But overall, the market is one of the most hospitable for IPOs in years. U.S.-listed IPOs have raised more than $60 billion so far in 2020, according to Dealogic, on track for the highest level since the tech boom in 2000. On average, these IPOs have risen 23% in their first day of trading, the biggest first-day pop since 2000.
—Preetika Rana contributed to this article.
Write to Corrie Driebusch at [email protected], Maureen Farrell at [email protected] and Cara Lombardo at [email protected]
