In an extremely terse announcement, Airbnb stated that it would launch an IPO at some point in 2020. While details from the company are non-existent, some information can be gleaned from their actions. Plans have leaked from several Airbnb partners. The New York Times sources suggested that the company sought to include their hosts in the process. In order to do so, they would first need to trade publicly.
Unlike most other tech start-ups, Airbnb is profitable. Investors suffering fatigue from unprofitable IPOs may gravitate towards Airbnb as a result. Uber, Lyft, Slack and Pinterest all began public trading this year – and all remain unprofitable. Amazon famously failed to turn a profit for much of its early existence. Unlike Amazon, the IPOs of this new generation of start-ups is tanking out of the gate. Airbnb stands a good chance of bucking this trend.
Airbnb Working to Bolster Their Image
While Airbnb is profitable, they have suffered some public relations issues in the past. The company is now actively working to mitigate these problems. San Francisco – Airbnb’s home city – has been an uphill battle from the start. A perennial housing crunch caused many of the city’s inhabitants to see Airbnb as a villain. New housing laws were passed that would make it more difficult for home owners to rent their property through the service.
Airbnb compromised with the city to ease the situation. Further, they’ve donated $25 million towards establishing affordable housing within the city. San Francisco is not the only city to crackdown on Airbnb. Many major cities around the world have enacted legislation to limit the company’s operational capabilities.
This Year’s Tech Start-Ups IPOs
The Airbnb IPO would follow a list of large-scale IPOs by recent tech start-ups. Uber and Lyft both went public in 2019. Unfortunately for both, their stock prices have performed poorly since. Both services are unprofitable and are not estimated to turn a profit in the near-term. Further, Uber’s public image is in absolute shambles. Accusations of price gouging, poor treatment of contractors and more, have tarnished the ride sharing service.
Other start-ups have failed before reaching the IPO phase. Business space sharing firm WeWork’s planned IPO never happened. A cold reception to its massive cash-burn rate while maintaining a multi-billion dollar market cap, have caused the company to back out before shares began trading. While they’re still aiming for an eventual IPO, it’s triggering some extreme measures. Major investors have already ousted WeWork’s CEO Adam Neumann, but have allowed him to retain his Chairman role.
Article By: Adam Stone