Will Airbnb Survive the COVID-19 Pandemic?

With business down as much as 80 percent in 2020, will Airbnb survive the COVID-19 pandemic? Only time will tell.

Rachel Curry - Author
By

Nov. 17 2020, Published 10:49 a.m. ET

San Francisco-based Airbnb released its previously confidential pre-IPO filing paperwork with the SEC on Nov. 16. The company, which plans to go public through the Nasdaq Exchange in the near future, is definitely feeling the effects of the COVID-19 pandemic.

Article continues below advertisement
Article continues below advertisement

Form S-1 tells us that Airbnb lost $696.9 million from January to September 2020, which is a significant increase from previous years. The company's revenue hit $2.5 billion for the same period, which is a year-over-year decline of 32 percent. It seems like Airbnb started picking up speed in the domestic district by the third quarter of 2020, but one question remains. Will Airbnb survive the COVID-19 pandemic?

Article continues below advertisement

How was Airbnb founded?

Airbnb wasn't always in the news for its venture into the publicly traded domain. The company launched in 2008 when three roommates offered up some modest air mattresses in the apartment at the rate of $80 per night.

Brian Chesky and Joe Gebbia took advantage of a need for affordable accommodations during San Francisco's local conferences. Eventually, Nathan Blecharczyk came into the picture too.

Article continues below advertisement
Article continues below advertisement

One of Airbnb's most noteworthy fundraising efforts was the creation of the Obama O's and Cap'n McCain custom cereals during the 2008 presidential election. Each box was $40, which ultimately earned $30,000 from the creative endeavor. Eventually, institutional investors like Silver Lake, Y Combinator, Sequoia Capital, and Andreessen Horowitz took a chance on Airbnb.

Gebbia said Airbnb designs for trust

In addition to his role as co-founder, Gebbia continues to serve as Airbnb's chief product officer. In 2016, Gebbia performed a Ted Talk titled "How Airbnb Designs for Trust."

Article continues below advertisement
Source: YouTube

In the Ted talk, Gebbia discussed the stranger-danger bias and how the company helped propel people to stay in each others' homes. At the time, the company had served 123 million hosted nights. In July 2020, Airbnb customers booked a million nights in a single day. Most of the bookings were domestic travel.

Article continues below advertisement

Who owns Airbnb?

Co-founders Gebbia, Chesky, and Blecharczyk still own Airbnb and each of them fills unique positions. As Airbnb heads toward its market debut, the co-founders maintain a whopping 42 percent stake in the almost-public company. The bigger someone's equity stake, the more likely they are to hold significant power when voting or making decisions.

Article continues below advertisement

Is Airbnb publicly traded?

Airbnb is en route to being publicly traded. Once it goes through its IPO, general public investors will be able to get a slice of the pie.

When is the Airbnb IPO?

We still don't know a firm date for the Airbnb IPO, but releasing the S-1 is a huge step in the right direction. When Airbnb's time on the Nasdaq arrives, the company hopes to raise a total of $3 billion.

Article continues below advertisement
Article continues below advertisement

Will Airbnb survive?

In May of this year, Airbnb laid off about a quarter of its workforce. The pre-IPO filing tells us that the business declined 80 percent this year, which caused the founders to put the IPO on hold.

Airbnb's registration statement to the SEC says, "We do not believe it is possible to predict COVID-19’s cumulative and ultimate impact on our future business, results of operations, and financial condition. COVID-19 has materially adversely affected our recent operating and financial results and is continuing to materially adversely impact our long-term operating and financial results. However, we believe that as the world recovers from this pandemic, Airbnb will be a vital source of economic empowerment for millions of people."

Advertisement

Latest Get Real News and Updates

    Opt-out of personalized ads

    © Copyright 2024 Market Realist. Market Realist is a registered trademark. All Rights Reserved. People may receive compensation for some links to products and services on this website. Offers may be subject to change without notice.