How Airbnb Successfully Went Public in a Pandemic

Home sharing giant Airbnb Inc. took a major hit during the past few months at the effect of COVID due to shutdowns and restrictions around the world, reporting their lowest revenue in a decade as online travel stocks slumped. Founded in 2008, by now Chief Executive Brian Chesky, Airbnb revolutionized the hospitality industry by showcasing how millions of people were willing to forgo hotel stays and books spaces offered by hosts on its platform. Today, the company has more than 7 million short-term listings worldwide and has received an evaluation of 100 billion, more than Marriott International Inc., Hilton Worldwide Holdings Inc. and Hyatt Hotels Corp. combined.

How? The company successfully managed to stay afloat by cutting back on nonessential spending and letting go of a quarter of the company’s workforce. Moreover, July also saw COVID restrictions ease up in the US with the online platform welcoming 100,000 new guests, looking to escape the confinements of their homes. In fact, according to e-commerce research company Edison Trends, July earnings were 22% higher than previous years. Although the company has shown signs of recovery it’s rivals Book Holdings Inc. and Expedia Group have reported their lowest revenue in a decade.

Benefits of Going Public

Airbnb’s decision to go public follows pressure built up from long time investors and
employees wanting to cash out before their stock options get lost in the new year. In
a rare move Airbnb has said that upon its listing it would allow its employees to sell
up to 15% of their shares.

The three co-founders are also selling around 1.9 million shares in the offering, bringing the total shares in the IPO to at least 51.9 million. However, the trio will still maintain 43% of Airbnb’s voting power after the offering. Additionally, the money raised by going public can also refinance the billion dollar funding deal the company received from Silver Lake and Sixth Street Partners to navigate the crisis earlier this year.

Since going public, the company’s shares have more than doubled reflecting a soaring market for new stock listings. Initially trading at $146 on the Nasdaq Stock Market, more than double its initial-public offering price, Airbnb has now closed slightly lower than its opening price at $144.71. Airbnb’s debut comes at the end of a record year for IPOs as investors have been bidding up shares of new offerings and as stock markets have surged.

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