By Levi Sumagaysay
Airbnb Inc. had to put its plans for an initial public offering on hold in the spring because of COVID-19, but after a bounceback from customers tired of sheltering in the same place for months, it is aiming to raise as much as $3 billion in an IPO by the end of the year.
Airbnb /zigman2/quotes/222990650/composite ABNB -2.30% , which offers a platform for booking lodging, publicly filed its prospectus with the Securities and Exchange Commission on Nov. 16 and disclosed numbers that show how its 13-year-old business has survived the pandemic despite widespread doubts.
“We started writing this letter in March. Then the pandemic hit,” co-founder and Chief Executive Brian Chesky said in a letter included in the filing. “When borders closed and travel stopped, our business declined by nearly 80%… I don’t think many people expected us to go public this year. I know some people questioned if we’d make it at all.”
Airbnb, which is based in San Francisco, made it. It actually posted a third-quarter profit of $219 million, due in part to a rebound in its business but also because of aggressive cost cuts it made in the spring. Its revenue of $1.34 billion for this year’s third quarter was its second-biggest quarter ever. Still, the company said it lost more money in the first nine months of the year than it lost all of last year.
Since its founding, the company has raised $6.4 billion, according to Crunchbase. The night before its expected public offering, it priced its shares at $68 a share at a valuation topping $40 billion. That tops the last revised and increased pricing range of $56 to $60 a share , which would have given it a valuation of nearly $36 billion.
Airbnb is offering 50 million shares in the IPO, while selling shareholders recently trimmed their offering amount to 1,551,723 shares from 1,914,894 shares.
The company, which competes with other travel-booking sites like Expedia Group Inc. /zigman2/quotes/202291990/composite EXPE +0.98% and listing sites like Craigslist, plans to list its shares on the Nasdaq Global Select Market under the ticker symbol ABNB. The listing will be led by Morgan Stanley and Goldman Sachs, along with more than 30 other underwriters.
Here’s what else Airbnb disclosed in its IPO filing .
Overall, Airbnb has seen growth slow and revenue drop because of the pandemic. Its revenue in the fourth quarter of 2019 was $1.1 billion, but it dropped dramatically to $841.4 million in the first quarter of 2020 and $334.8 million in the second quarter.
Sales bounced back over the summer, however, as travel and shelter-in-place restrictions were lifted and potential travelers looked for new places to work from “home.” Revenue rebounded to $1.34 billion in the third quarter.
Still, the company is feeling the overall effect of the pandemic. In the nine months ended Sept. 30, the company’s revenue fell 32% from the year-ago period, to $2.5 billion. Its gross booking value — the dollar value of bookings — was $18 billion in the first nine months of this year, down 39% from last year, when it eventually reported $38 billion in annual gross bookings.
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The company also said listings are down, which could be attributed to many factors, including that its hosts are wary because of the coronavirus or could be facing financial distress.
“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,” Airbnb said in its filing.
COVID-19 cases are on the rise again in the U.S. and elsewhere, and so are various restrictions on businesses and travel, underscoring Airbnb’s repeated warnings of the risks the pandemic poses to its business.
Airbnb attributed the comeback it enjoyed in the third quarter to the return of short trips and domestic travel, as well as long-term stays.
The word “resilient” was sprinkled all over the company’s prospectus, applied to categories such as domestic travel around the world. It also said short-distance trips within 50 miles from people’s homes were strong, even at the height of the lockdowns in April. Airbnb said long-term stays, which last at least 28 days, was one of its fastest-growing categories last year and were resilient, as is travel outside its top 20 cities from last year.