Brian Chesky, Nathan "Nate" Blecharczyk, and Joe Gebbia, the co-founders of Airbnb, could be worth around $5.5 billion each on Thursday morning, when the accommodation and home-sharing website floats in an IPO that marks the year’s most unlikely business comeback.
Few could have foreseen that Airbnb would have been one of the year’s most high-profile initial public offerings back in March and April.
As the pandemic brought global travel to a standstill, both guests and hosts turned angrily on the platform, with many of the former complaining they were not being refunded (or not being refunded quickly enough) and the latter saying they were left out of pocket by Airbnb’s belated decision to unilaterally override hosts’ cancelation policies and refund most guests in full.
Airbnb issued more than $1 billion in refunds during the pandemic. “While this helped our guests, it created problems for our hosts—half of whom depend on their Airbnb income to pay their rent or mortgage,” Airbnb said.
The company laid off 25 percent of its workforce, hit the brakes on its “experiences” product, and raised $2 billion in emergency funding from investors, including private equity firms. The terms of the loans implied Airbnb was worth some $18 billion, compared to the $31 billion it was worth during a 2017 funding round.
The long-trailed IPO was put on hold, some suspected indefinitely.
Incredibly, however, the company has rebounded, with booking almost fully recovered to pre-pandemic levels as it cornered a new market in local travel and long-term stays.
And now, the delayed IPO is back as well.
In a sign of optimism, the company has raised the target price of its shares this week. In a government filing Monday, Airbnb said it expects to price its shares between $56 and $60 each, up from an estimated range of $44 to $50 earlier this month, giving the company a top valuation of $42 billion. The filing did, however, bluntly caution investors: “We have incurred net losses in each year since inception, and we may not be able to achieve profitability.”
Airbnb is expected to issue a final share price late on Wednesday before its IPO Thursday on the Nasdaq stock market in New York.
It’s not entirely clear what each of the founders’ overall ownership stake will be after the IPO. However, Forbes has previously estimated that each one owns about 13 percent of the company. If that figure is accurate, their slices of the company could be worth well over $5 billion if the IPO succeeds at the upper end of the scale.
As well as getting a paper fortune to admire, the three founders will also be getting some cold hard cash as they’re selling millions of dollars worth of their own shares in the launch.
Employees at Airbnb with stock options are likely to be the other major beneficiaries of the sale.
Many employees have previously complained that the terms of their stock options have meant they’ve been unable to cash them in. With the company going public, all that will change.
Only around 20 percent of Airbnb’s active listings these days are for spare bedrooms in someone’s home, as per the company’s original vision, according to analysts.
The Financial Times quotes Transparent, a research firm specializing in short-term rentals, as saying that more than half of all listings are managed by hosts with at least two properties on the platform. Six percent control more than 100 listings, and some over a thousand.
