Public holidays – Airbnb’s stockmarket debut can be successful | Enterprise
November 21st 2020
TAlmost a bad time. By the time the plague hit in March, Brian Chesky had just finished compiling Airbnb’s most anticipated list of records. Instead of going to New York to ring the opening bell at the Nasdaq, he found himself sitting for days (and nights) at Zoom in his office in San Francisco, fighting to secure his online vacation spot. “It was like traveling 100 miles an hour and all of a sudden you had to hit the brakes,” the Airbnb recall recalls.
This time around Mr. Chesky can be beneficial. On November 16th Airbnb unveiled its potential, putting it on track for its first public release (IPO) next month, as well as the first covid-19 vaccine available. IPO could cost Airbnb more than $ 30bn. The company’s long-term expectations are hard to compare.
The vaccine is not the only thing that makes this a good time for Airbnb to go public. The window for professional IPOs has not been opened like this since the dotcom bubble 20 years ago. More than 50 technology floats this year, raising $ 26bn total, according to Dealogic, the data provider. Many Airbnb employees want to use the shares they were given before their term expired. The company is running out of money, in addition to the $ 2bn raised earlier this year to collapse – which is why their plan to take off earlier plans to register shares directly without using new funds.
Chesky has a good recovery story, too. In the second quarter the number of overnight stays on Airbnb dropped to 28m, from 84m a year ago. Full reserves fell by two-thirds, up to $ 3.2bn. Over the next three months, the numbers have risen sharply, to 62m and $ 8bn, largely due to what Mr Chesky calls “redistribution of travel”. Visitors surveyed foreign cities affected by the virus, formerly Airbnb’s security bases, to reach homes and villages. They live at least 500 kilometers (800km) from home climbed by more than 50% during the summer.
Chesky has also made Airbnb a pillar. Prior to the epidemic, the company had invested in new businesses, including airports and radio stations, in order to raise funds. From then on his words “went back to the roots”. It has fired about 1,800 employees, a quarter of employees, closed many new jobs and significantly reduced online advertising (more than 90% of visitors now reserve their Airbnb page). As a result, even though the company lost $ 916m in the first six months of the year, it made a profit of $ 219m in the third quarter.
Will Airbnb be able to do this? Even before the plague began to grow. When things return to normal, the potential for growth may be lower, in the company’s stock market. Bernstein, a research company, expects the growth rate of annual rental delays to reach 7-8%, up from 20% over the past few years. And the limits used by Airbnb remain for its main rivals, Booking.com and Expedia (who use VRBO, a website that lists holiday homes).
The future of Airbnb also depends on its ability to oversee its operations and implement a legal list in many of its operational areas. As with other large online companies, lenders have found ways to abuse the platform, for example through the use of party rentals; in July police in New Jersey disrupted a disturbing incident by 700 people. In terms of legislation, the company says that according to its expectations by October 2019, 70% of its 200 high-income and financial cities had imposed restrictions, as a limit on how many days rental apartments can be rented.
The great work of Mr. Chesky, however, it is important to know what Airbnb, which is now entering adolescence, should be in its infancy. He also said he would like to see changes like Apple or Disney-companies that have changed for a while and extended the founders. The epidemic has backed down from its new businesses. “We will continue to do new things as the world changes,” he says, “or we will stop doing new things – and there will be no future.” Although, sometimes, doing new things means clinging to the old. ■
Editor’s Notes: Some of our covid-19 articles are free for readers of The Economist Today, our daily article. For more information and our response to the plague, see our site
The article appeared in the Business section of the print headline “Public Holidays”
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