US: Airbnb is rumoured to be on the verge for filing for its initial public offering [IPO] later this month in an unexpectedly rapid development for the home-sharing behemoth.
According to The Wall Street Journal, the company is set to file the relevant paperwork with the Securities and Exchange Commission before the end of the month, a crucial step for any firm planning to go public. Morgan Stanley is believed to be leading the offering, supported by Goldman Sachs Group.
In the months that have passed since the coronavirus pandemic broke out around the world earlier this year, Airbnb raised $2 billion in equity and debt in less than a fortnight, first from Silver Lake and Sixth Street Partners, and then from Fidelity, T. Rowe Price and Blackrock in the second raise.
The firm’s well-publicised and long-awaited IPO may come at a surprisingly opportune moment as the stock market continues its rebound from its nadir in March when restrictions on mobility and travel were introduced. Financial markets platform Dealogic estimates that US-listed IPOs have already raised over $60 billion in 2020, following on from the likes of music label Warner Music Group and insurtech startup Lemonade who have been seeking to raise funding from public investors.
In doing so, Airbnb would be following the same path of other sharing economy unicorns such as Uber and Lyft, although both were left disappointed as their share values fell significantly below the IPO prices they had originally hoped to achieve.
Before Covid-19, it had been widely expected that Airbnb would file to go public in March, but those plans had to be put on hold as the pandemic took hold and the company began “haemorrhaging cash”.
CEO Brian Chesky, who is reported by Forbes to have a net worth of $3.1 billion, revealed that the company had had to “firefight” as a consequence of losing 80 per cent of the business in the space of six weeks or so in the initial stages of the pandemic. It has since laid off laid off 25 per cent of its global workforce [around 1900 employees] and undertaken a number of other stringent cost-cutting measures to navigate the crisis.
In a webinar three weeks ago with Reuters’ Gina Chon and Rob Cox, Chesky consciously brushed aside questions about Airbnb’s IPO plans but did reveal it had been approached about going public via a merger with a blank-cheque acquisition company.
Mergers with so-called special purpose acquisition companies [SPACs] are seen as a relatively new but increasingly popular way of listing on the stock market. SPACs are shell companies that use the proceeds from IPOs and debt to acquire another company, and have gained traction as a quick-fire route to the stock market within two or so years for firms that are concerned about the length of the IPO process.