November 17, 2020
Photo: Lionel Bonaventure/Getty Images
There aren't many tech companies harder hit by COVID-19 than Airbnb. When the pandemic took hold, the company's business was undermined and its plan to go public this year looked totally shot. But it forged ahead and, on Monday, filed its long-awaited S-1, suggesting that it seeks to list before the end of the year after all.
Here's everything you need to know.
Back in the halcyon days of 2019, Airbnb's numbers were huge. Customers booked almost $38 billion of nights and experiences on the platform, bringing in $4.8 billion in revenue. The company still lost $674 million though, thanks in part to hefty sales and marketing costs.
The pandemic has been awful for Airbnb. Its revenue started to decline in March, before plunging in April, when bookings were down 72% year-over-year. Things recovered a bit over the summer, but bookings are still down. The collapse in demand has seriously affected Airbnb's financials.
But it's not all bad. In the third quarter of 2020, the company made a profit of $219 million, not much smaller than the nearly $267 million profit it made in Q3 2019. (Q3 is always a good period for the company, as it's the busiest travel season in the U.S. and Europe, and this year lockdown restrictions were less stringent in many places over the summer.)
Airbnb's risk factors are dominated by three themes: COVID-19, regulation and competition.
The pandemic devastated Airbnb's business in the first part of this year. And while summer offered some respite, the company thinks things will get worse before they get better thanks to a new wave of infections in Europe and the U.S.
The other big problem is regulation. "We are subject to a wide variety of complex, evolving, and sometimes inconsistent and ambiguous laws and regulations," the company says. And it truly is a wide variety: Short-term rental laws, tax regulation, financial regulation, GDPR and even Section 230 all crop up as potential issues for the platform.
And then there's Google. Of all Airbnb's competitors, the search engine gets the most discussion in its S-1, revealing some quite intense animosity.
Airbnb's valuation is an open question still: Though it was valued at $31 billion back in 2017, an April 2020 round valued it at just $18 billion. But even at the latter valuation, some people stand to do very well.
"Very sneakily but not surprisingly, Airbnb is NOT breaking out Experiences revenues or investments." — Skift CEO Rafat Ali suggested that might be because Airbnb's return on investment with experiences is … not great so far.
"Airbnb reports that building a community is their primary differentiating factor." — CMX's David Spinks did the math, and "community" appears 166 times in the S-1.
"Wow! These Airbnb numbers are [terrible]/[incredible]! Brian Chesky is [the next Steve Jobs] / [the wrong person to lead this company]. [Congrats to the @airbnb team! Huge fan!] / [Ooof another overfunded sharing economy dud]" — Packy McCormick had the best take.
It wouldn't be a tech IPO filing without a few ridiculous and nonsensical claims. Fortunately, Airbnb doesn't disappoint:
"We have helped millions of people satisfy a fundamental human need for connection. And it is through this connection that people can experience a greater sense of belonging."
"People are feeling increasingly disconnected in the world, and loneliness is pervading our society. The opposite of loneliness is belonging — the feeling of deep and genuine connection to a person, a place, or community. It's the feeling of being 'at home.' The feeling of being known and loved."
Values: "Be a cereal entrepreneur. Our employees are bold and resourceful. 'Cereal entrepreneur' refers to the time when AirbedandBreakfast.com was struggling to earn revenue, and Brian and Joe decided to sell collectible breakfast cereal during the U.S. presidential election in 2008. They created and sold Obama O's and Cap'n McCain's and earned nearly $30,000, enough to keep Airbnb going."