It’s never made an annual profit and business is hard, but this stock market float is grabbing attention.
The eagerly-anticipated Airbnb IPO has moved into the starting blocks after the home sharing service this week filed a prospectus ahead of a likely December stock market flotation.
Airbnb is expected to be valued at more than $30 billion (£22.6 billion) and raise $3 billion (£2.2 billion) in the IPO, which follows Wall Street debuts this year for tech companies including Snowflake and Unity.
While the Covid-19 pandemic means conditions for the Airbnb IPO are far from ideal, the 349-page document filed with the SEC on Monday night revealed that the San Francisco-based company managed a net profit of $219 million (£165.4 million) in the third quarter of the year.
This came after it reduced full-time headcount by 25% in May and also suspended marketing spend in response to global travel restrictions. Revenues were 18% lower at $1.34 billion (£1.01 billion) in the three months to 30 September, with the second wave of Covid-19 infections now likely to mean a drop in nights booked in the current quarter.
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Active listings on its website have remained stable at about 5.6 million despite the decline in booking activity, boosting confidence in the strength of the business model.
The company wrote:
“We believe that the Covid-19 pandemic reinforced that travel is an enduring human desire, even in the face of challenges. People have increasingly sought travel options closer to home during Covid-19, and Airbnb’s offerings are well suited to adapt to this changing dynamic.”
Like most of Wall Street's tech newcomers, Airbnb has yet to make an annual profit and does not expect to do so in the current year. It also warned prospective investors about the threat of a potential $1.35 billion (£1.02 billion) tax bill relating to the sale of intellectual property.
Airbnb plans to list on Nasdaq, with bosses hoping to tap into the continued resilience of the US stock market during the pandemic and in the wake of the US presidential election after trials showed the Moderna (NASDAQ:MRNA) and Pfizer (NYSE:PFE)/BioNTech (NASDAQ:BNTX) vaccines are more than 90% effective.
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Driven by a successful technology platform and rise of the sharing economy, Airbnb has so far facilitated more than 825 million guest arrivals since it was set up in 2008 by Brian Chesky, Joe Gebbia, and Nate Blecharczyk. In 2019, 54 million active bookers worldwide secured 327 million nights and experiences on the platform.
It believes there is a substantial market opportunity for the company based on annual estimates of $1.8 trillion for short-term stays, $210 billion for long-term stays and $1.4 trillion for experiences.
Your guide to buying Airbnb shares with ii
Early investment in Airbnb is not available to UK retail investors but you will be able to buy shares through ii on the first day they start trading.
Here are the steps you can take in advance to be ready for day 1:
1. Open an account
You will be able to hold shares in our Trading Account, SIPP, ISA and Junior ISA.
2. Complete the exchange agreements
You need to complete this form before you make your first international trade. We will prompt you to complete the agreements the first time you search for an international share price.
3. Complete a United States dealing (W-8) form
Before you can buy US-listed shares you need to have completed a W-8 form. You can find the form, and instructions for sending it back to us, on our Useful Forms page. You don't need to do this if you are only investing in a SIPP.
On the day shares are admitted there will be an initial period of price stabilisation, after which trading commences. This may only be a few minutes but can take a few hours, as was the case with Alibaba (NYSE:BABA) when it floated in 2014.
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Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.