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Airbnb Is Getting Ready for an IPO: What Investors Should Know

By Jon Quast – Aug 11, 2020 at 3:27PM

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It's been a brutal year for the travel industry, but Airbnb's results might be picking back up.

Vacation-rental company Airbnb is getting ready to go public via an initial public offering (IPO), according to sources for The Wall Street Journal. The company is often the subject of IPO rumors. However, sources say the company is planning to file paperwork with the Securities and Exchange Commission (SEC) in August. This sets up a potential IPO later in 2020.

There's no word yet on what kind of valuation Airbnb is seeking, but it's likely lower than its valuation before the COVID-19 pandemic. According to CNBC, the company's valuation had fallen from $31 billion in 2017 to $18 billion earlier this year. And since the pandemic began, the company has accrued $2 billion in additional debt. 

A long, wooden boardwalk leads to a vacation house rental at a beach.

Image source: Getty Images.

A challenging time for travel

The travel industry has been hit harder than most by the coronavirus, and Airbnb is no exception. In a message to employees in May, CEO Brian Chesky laid off 25% of Airbnb's workforce, saying 2020 revenue would be down over 50% year over year.

But perhaps things are already picking back up. One of Airbnb's biggest competitors is Vrbo, owned by Expedia Group. The company doesn't break out Vrbo's individual results, but noted it returned to bookings growth in June. Therefore, now may be an opportune time for Airbnb to access the public capital it most likely desperately needs. Investors may be enticed to buy the IPO based on improving trends.

Airbnb's upcoming filing will reportedly be confidential. This SEC provision allows companies to start the IPO process without Wall Street's scrutiny. If the company does decide to go public in the end, its financials won't be available to investors until about 15 days prior to the IPO date.

Jon Quast has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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