Airbnb Prepares for an IPO: What Investors Need to Know

Vacation rental company Airbnb is set to go public via an initial public offering (IPO), sources tell us. The Wall Street Journal. The company is often the subject of IPO rumours. However, sources say the company plans to file documents with the Securities and Exchange Commission (SEC) in August. This sets up a potential IPO later in 2020.

It’s not yet clear what kind of rating Airbnb is looking for, but it’s likely lower than its rating before the COVID-19 pandemic. According to CNBC, the company’s valuation has fallen from $31 billion in 2017 to $18 billion earlier this year. And since the start of the pandemic, the company has racked up $2 billion in additional debt.

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A difficult time to travel

The travel industry has been hit harder than most by the coronavirus, and Airbnb is no exception. In a message to employees in May, CEO Brian Chesky laid off 25% of Airbnb’s workforce, saying 2020 revenue would be down more than 50% year-over-year.

But maybe things are picking up already. One of Airbnb’s main competitors is Vrbo, owned by Expedia Group. The company does not detail Vrbo’s individual results, but did note that it returned to bookings growth in June. Therefore, now may be the time for Airbnb to access the public capital it most likely desperately needs. Investors may be incentivized to buy the IPO based on improving trends.

Airbnb’s next filing would be confidential. This SEC provision allows companies to begin the IPO process without the control of Wall Street. If the company decides to go public at the end, its financial statements will not be available to investors until approximately 15 days before the IPO date.

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