Airbnb's 'smart' plan to go public
Following the questionable IPOs of the ‘tech unicorns’ of Silicon Valley, especially the case of WeWork and its withdrawal of IPO filings, the market is becoming tougher on high-valued tech startups — especially those that are showing losses.
Masayoshi Son, the CEO of SoftBank, has also told its portfolio companies to get profitable soon, saying the public investors will not stand for complicated share structures and loss making companies.
Amidst the troubled waters, Airbnb is taking a smart approach to its plans of going public in 2020.
Airbnb, the home-rental company that has seen stellar market growth since its launch amidst the tough global economic climate of 2008, is now reportedly set to hire “Morgan Stanley and Goldman Sachs Group as joint lead advisors on its planned stock market flotation next year.”
Airbnb is planning on going public through direct listing, as opposed to an IPO that aims to sell shares in order to raise funds.
This approach will also see the space rental giant save on investment banking fees for the IPO.
Moreover, with the plan of going public in mid-2020, Airbnb will also avoid any market troubles and volatility in relation to the presidential elections to be held at the end of 2020.
According to PitchBook, Airbnb was valued at $31 billion In its most recent private funding round; making it one of the biggest firms to go public in 2020. The firm has raised above $4.4 billion over 15 rounds as per Crunchbase data.
Airbnb claims to have 7 million listings across 100,000 cities, while reporting $1 billion in Q2 2019 revenues without disclosures on profitability.
Companies that have gone public through a direct listing include Spotify and Slack, that have been trading down. However, considering how the office space rental company WeWork fared, it might be a better choice.