Airbnb files initial public offering
written by Bella PalmerAirbnb was able to turn a profit in Q3 despite being ravaged by the pandemic, following cost-cutting measures
Home rental startup Airbnb has conceded that it “may not be able to achieve profitability” as it filed its initial public offering (IPO) prospectus ahead of its highly anticipated stock market debut.
Since its launch in 2008 the company has disrupted the hotel industry and grown into a hospitality juggernaut that could see the company float on the Nasdaq with a $30bn valuation.
Despite strong historic revenue growth, Airbnb is yet to report an annual profit since Brian Chesky and Joe Gebbia launched the firm in San Francisco 12 years ago.
The coronavirus pandemic decimated revenues this year as a sharp reduction in global travel proved devastating for its business model, which sees hosts rent out accommodation via the Airbnb app and the company take a cut of each booking.
Despite being ravaged by the pandemic, Airbnb was able to turn a profit in the third quarter of this year following cost-cutting measures. In May it laid off 25% of its workforce and cut marketing spend for the rest of the year. It was also given an emergency $2bn cash injection from private equity.
It has sought to reposition its business for those looking to holiday nearer to their own home. Bookings more than 500 miles from the booker’s home have dropped 48%, while those less than 50 miles away are up 17%.
The recovery in the second and third quarters of 2020 is attributable to the renewed ability and willingness for guests to travel, the resilience of our hosts, and relative strength of our business model, Airbnb said.
Regardless, Airbnb is on course to take a huge hit from the pandemic this year. In the first nine months of 2020 the company brought in revenues of $2.5bn, down 32% on the year-ago period.
Between January and 30 September 2020 Airbnb notched up losses of $969.9m, already surpassing the $674.3m losses for the whole of 2019.
The company also expects its revenue growth to continue to slow in the future and lists the ongoing pandemic as a significant threat to its business.
Any further and continued decline or disruption in the travel and hospitality industries or economic downturn would materially adversely affect our business, results of operations, and financial condition, Airbnb said in its IPO prospectus.
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