Coronavirus threatens to delay Airbnb IPO

US: Airbnb’s IPO plan, one of the most heavily anticipated public listings in 2020, is in danger of being pushed further back to 2021 due to fears over the global spread of the COVID-19 coronavirus, according to Bloomberg.

The virus has already led the company to halt bookings in Beijing, one of Airbnb’s most valuable markets and epicentre of the virus, and plans to start the initial public offering [IPO] process appear to have been indefinitely placed on hold. It may consider waiting for a more opportune moment to go public, potentially even in 2021.

The Wall Street Journal also reported that China’s earnings from short-term rental business were down by 80 per cent compared to a year ago, with the coronavirus a likely factor behind the sharp drop.

Any IPO will be heavily dependent on Airbnb being able to prove its profitability or potential for profitability [before interest, taxes, depreciation and amortisation] but after a year where it posted net losses of $322 million over nine months leading up to September 2019  [after posting a $200 million profit the year before], investors will inevitably be concerned.

Airbnb spokesman Nick Papas told Bloomberg: “Although nobody can know the extent of the impact that the coronavirus outbreak may have, we believe that history shows that when global disruptions happen, the travel industry has bounced back in the long run.”

David Hsu, business professor at University of Pennsylvania’s Wharton Business School, told the website: “You want to come in with your best foot forward in a public listing – and this virus is hitting Airbnb hard.”

In recent times, Airbnb has sought to promote a healthy image of itself in the face of some negative press. It recently announced a tax collaboration with Vilnius, and has committed to shutting down party houses following a shooting in Orinda on the edge of San Francisco; the latter being an issue its community has had with the company’s business model.

Airbnb has also pledged to its community of stakeholders that it will open meetings each year in place of a traditional shareholders meeting.