Private property short-term rental platform Airbnb has ended recent speculation around when it will finally go public by officially announcing that it plans to do so next year. Founded in 2008, Airbnb was last privately valued at $31 billion, making it one of the five most valuable privately held start-ups in the world.
The announcement was made in the form of a concise statement that simply read that the company “expects to become a publicly-traded company during 2020”.
Airbnb’s declaration comes at a moment when many expensively valued private companies are debating the wisdom of taking the plunge into the stock market. WeWork, the co-working space operator, this week temporarily pulled the plug on its IPO when it became clear that public market investors weren’t willing to value it at even half of its last private valuation. The management of Stripe, the fintech start-up who this week closed a fresh private $250 million funding round at a valuation of $35 billion, have said they have to plans to take the company public.
In the current environment of cheap money filling up private equity and venture capital war chests, in-demand tech start-ups often appear to be better off staying private. They are achieving higher valuations, have ready access to more cash when they need it and are left relatively free to pursue long term goals rather than be under pressure to demonstrate their path to profitability – or greater profitability. Ride-sharing apps Uber and Lyft had toiled badly since their late spring IPOs.
Airbnb is arguably an even bigger brand than Uber and has become a go-to service for many travellers – both on personal trips and even for business. The platform allows hosts to advertise free rooms or whole properties as an alternative, often a cheaper one, to hotel accommodation. As well as the cost factor, many travellers say they simply prefer to stay in an apartment rather than a hotel room. Airbnb earns a fee from both the booker and the party offering the accommodation.
On Wednesday Airbnb announced revenues of over $1 billion for the second quarter of the year – the second time that has been achieved with the first the third quarter of last year. That level of profitability puts the company in a different bracket to most of the other recent big tech floats, where most of the companies are still loss making. It can be presumed that is why Airbnb has reached the conclusion it is now in a position of enough strength to stand up to the harsher glare of public market investors.
This article is for information purposes only.
Please remember that financial investments may rise or fall and past performance does not guarantee future performance in respect of income or capital growth; you may not get back the amount you invested.
There is no obligation to purchase anything but, if you decide to do so, you are strongly advised to consult a professional adviser before making any investment decisions.