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Airbnb may seek direct offering instead of IPO

If it does choose the direct offering route, Airbnb will follow the footsteps of Slack and Spotify.

The logos of Airbnb are displayed at an Airbnb event in Tokyo, Japan, June 14, 2018 in this file photo. Airbnb may be considering a direct offering instead of an IPO, according to a Bloomberg report. (Issei Kato/Reuters)
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Home-sharing company Airbnb may eschew an IPO in favor of a direct listing, according to a Bloomberg report, following a rocky summer of tech public offerings.

Investors over the course of the summer have cast doubt about tech start-ups’ ability to survive on the public markets, starting with ride-hailing giant Lyft, whose value sank to $11.6 billion Tuesday, or roughly half of its value when it started trading in March. Uber’s shares are down nearly a third. This week, co-working company WeWork postponed its IPO indefinitely.

If Airbnb chooses to go the route of a direct listing, it could help shield the company from some of the same scrutiny faced by its peers, as well as limit the costs associated with an IPO. That’s the route messaging company Slack took, although its stock is also down significantly since starting trading this summer.

Airbnb says it will go public in 2020

Investors are casting a wary eye on big-spending tech companies, who frequently tout the need to reinvest over delivering a profit to shareholders. That’s fine when a company is privately held, but the recently public companies are finding out that being publicly traded can bring additional — sometimes unwelcome — scrutiny.

It’s unclear whether Airbnb is currently profitable. CNBC and Bloomberg News have reported that Airbnb earned a small profit in 2017. The company said in September that its second-quarter revenue was “substantially more than $1 billion,” the second such quarter in its history.

WeWork says it will withdraw its initial public offering filing, postponing IPO indefinitely

Airbnb declined to comment. Airbnb previously announced it would go public in 2020, without providing any detail.

Since it was founded in 2008, San Francisco-based Airbnb has grown into a home-sharing platform with more than 7 million rental listings across nearly 200 countries, according to the company.

Airbnb has also attracted significant criticism from governments, housing advocates and the hospitality industry, who say the company facilitates illegal short-term renting and puts additional housing pressure on cities already struggling with the issue.

When everyone is a tech company, no one is

No matter what course the company takes, Baird senior research analyst Michael Bellisario said, the hotel industry will be watching closely.

“The competitive threats to the hotel industry have been significant this cycle,” he said, adding that alternative accommodations like those offered by Airbnb have had a large impact on the industry.

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