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Airbnb announces it will go public next year after WeWork delays IPO

Rental service, which has about 150 million users in more than 65,000 cities, was last valued at $31bn in September 2017

Airbnb announces it will go public next year after WeWork delays IPO
Airbnb was founded by CEO Brian Chesky, a 37-year-old former bodybuilder, with two former roommates in 2008, by renting air mattresses in a room in San Francisco Photograph: Charles Platiau/Reuters

Airbnb, the home-sharing rental business, is to go public “during 2020”, the company said in a brief statement on Thursday.

The service, which claims 7m Airbnb listings in over 100,000 cities and 8.2 million guest arrivals in the year to July, was last valued at $31bn in September 2017.

WeWork's IPO delay a blow to Japanese investment giant Softbank

The announcement comes days after the We Company, parent of the office-sharing business WeWork, was forced to delay its initial public offering (IPO) after potential investors questioned a $47bn valuation put on it by its largest investor, SoftBank, and corporate culture that concentrates power in the hands of co-founder Adam Neumann.

Airbnb did not clarify whether it has confidentially filed its S-1 IPO paperwork, which would include financial information for potential investors to consider.

Airbnb has floated potential IPO plans in the past, with co-founder Nathan Blecharczyk saying that the company “had not decided” if it would go public this year.

“We have already said that we are taking the steps to be ready to go public in 2019. That doesn’t mean we will go public in 2019,” Blecharczyk told Business Insider in March.

The company was founded by CEO Brian Chesky, a 37-year-old former bodybuilder, with two former roommates in 2008, by renting air mattresses in a room in San Francisco.

The company struggled with investor support at first, but it picked up a $600,000 seed investment in 2009 and soon after became a quintessential tech “unicorn” and established its founders and early investors will have the potential to collect billions if taken public.

In its third funding round, in 2011, Airbnb raised $112m from investors that included Amazon’s founder, Jeff Bezos. It picked up another $1.6bn in venture capital (VC) in 2015 and $1bn in 2017, raising a total of $4.4bn in VC investment.

In November the company said it planned to venture beyond renting home-sharing. A project called Backyard, building new homes designed to accommodate short-term rentals, is slated to test prototypes later this year, according to CNBC.

On Wednesday, the company said it raked in more than $1bn in revenue for the second quarter but did not give details on whether it was profitable. As of 15 September 2019, hosts have earned more than $80bn sharing their homes and spaces on Airbnb, the company says.

It has previously said that its earnings before interest, taxes, depreciation and amortization were positive for 2017 and 2018.

Market analysts said they believed Airbnb might receive a warmer welcome from investors than Uber or Lyft, both offerings this year that have fared badly after failing to show investors a path to profitability.

Other tech startups, including Zoom, Slack, PagerDuty, Cloudflare and Pinterest, that went public in 2019 are currently trading above their IPO price.

“I think it’ll be a whole different reception for Airbnb, assuming that they can show they’re a profitable business without having to lose money on marketing,” Kathleen Smith, principal at Renaissance Capital, told Reuters.

Airbnb did not release any details about how it intends to list its shares, whether using a Wall Street bank as an underwriter or taking a less costly, direct-listing route to investors.

Topic: #airbnb #wework
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