Airbnb Hopes to Raise $3 Billion in a December IPO

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Airbnb Hopes to Raise $3 Billion in a December IPO

By Dennis Schaal

Skift Take
Airbnb’s proposed December timing for an initial public offering could be dicey because the U.S. presidential election and its aftermath is such a wild card at this point. Still, a $3 billion funding infusion could help Airbnb pay down the high-interest private equity debt that it raised earlier this year.

Airbnb plans on waiting until December, after the expected market volatility of the U.S. presidential election, to execute an initial public offering and to raise about $3 billion.

The funding infusion wouldn’t be huge when you consider that Airbnb raised about $2 billion in debt at double-digit interest rates in two rounds from private equity investors in April.

Reuters broke the story about the timing of Airbnb’s potential IPO, reporting that the home-sharing company wanted to wait until after the U.S. presidential election, and would aim to hit the public markets in December.

When Airbnb was preparing an IPO pre-pandemic, raising cash wasn’t its primary motivation — the driving force was to enable employees to monetize stock options which were due to expire.

The $3 billion, though, sure couldn’t hurt considering the obliteration of rentals and travel in the early stages of the pandemic. Especially if Airbnb can use the money generated in an IPO to pay down the high-interest financing it attracted from private equity investors.

For example, Expedia Group offered senior notes in July after it had raised high-interest private equity financing in April, and tentatively plans to pay it off within the next year.

Sources told Reuters that Airbnb, which has seen a surge of bookings in the past few months, could attract a $30 billion valuation, which would be on par with the level it achieved in 2019, but would be way higher than the $18 billion valuation it garnered from the private equity investment in April.

Reuters had few additional details on Airbnb’s recent performance that wasn’t already public, and there was no further word on how the company might articulate a pat to profitability.

Airbnb confidentially filed its registration statement for an IPO in August. Some analysts said an initial public offering and a road show would have to include Airbnb’s financials for the third quarter, which ended September 30.

One issue that investors are likely looking at is Airbnb’s relationship with cities and regulators — although this undoubtably is not the top issue in the minds of investors. Airbnb has been on a mission to resolve its house party problem following fatalities at a party at an Airbnb rental in Orinda, California last Halloween.

Airbnb announced on Friday that it is banning one-night stays in the U.S. and Canada over the Halloween weekend in a move that’s geared to avoid a repeat of Halloween 2019.

At the same time, Vrbo announced Thursday that it was giving hosts discounted pricing for the NoiseAware service in another bid to monitor guests gone wild.

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