Airbnb Has Public Ambitions

The company has filed to go public and released its prospectus on Monday.

Airbnb-Has-Public-Ambitions

On Monday, Airbnb released its prospectus to go public. The company plans to trade on the Nasdaq using the symbol “ABNB.” Airbnb is the platform that gives users an opportunity to book rentals and travel experiences.

Last quarter, the company had a net income of $219 million, with revenues of $1.34 billion. Though the previous quarter saw a profit, it’s down 19 percent from a year ago when its revenue was $1.65 billion. The company has seen previous profitable quarters in 2018 and 2019.

Airbnb had a net loss of $674 million in 2019, with a revenue of $4.81 billion. So far this year, the company has had a $697 million net loss and $2.52 billion in revenues. Like many businesses have seen this year, the coronavirus pandemic has likely impacted its business due to a decline in travel.

The company hopes to build a community of guests and hosts, saying that 9.2 million shares of non-voting stock would be set aside for hosts in an endowment fund.

The company outlined the following in its prospectus: “Our guests are not transactions, they are engaged, contributing members of our community. Once they become a part of Airbnb, guests actively participate in our community, return regularly to our platform to book again, and recommend Airbnb to others who then join themselves. This demand encourages new hosts to join, which in turn attracts even more guests. It is a virtuous cycle, guests attract hosts, and hosts attract guests.”

Airbnb will list three classes of stock – Class A, Class B, and Class H. Shareholders will get one vote with Class A stock and no votes for class H shares, which will likely fall to long-term hosts. Class B shareholders will receive 20 votes a share and include early investors and founders of the company.

The company has announced many cost-cutting measures as travel has become more limited. It plans to lay off around 1,900 workers, or one-quarter of its staff. The online vacation rental marketplace also cut marketing expenses and raised billions to cover its debt.

Unlike many businesses impacted by the pandemic, Airbnb has recovered some of its losses earlier in the epidemic when rentals surged in rural areas as more prominent residents fled cities hit hard with the virus.

The company said, “In early 2020, as COVID-19 disrupted travel across the globe, Airbnb’s business declined significantly. But within two months, our business model started to rebound, even with limited international travel, demonstrating its resilience.”

The company noted that while travelers wanted a way out of their homes, they avoided crowded hotels in their escape.

“We believe that the lines between travel and living are blurring, and the global pandemic has accelerated the ability to live anywhere. Our platform has proven adaptable to serve these new ways of traveling.”

The company admitted that listings are down and will probably decline more because of the pandemic.

“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. Our business, results of operations, and financial condition could be materially adversely affected if our hosts are unable to return to normal operations in the near to immediate term,” the company said.

Airbnb has a Stakeholder Committee on its Board of Directors. The committee’s mission is to consider key stakeholders’ interests, including hosts, guests, employees, and communities. The practice is called “stakeholder capitalism” and acts to serve several groups, rather than merely shareholder interests.

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