Airbnb Not Worth IPO Value

Airbnb generated pre-IPO buzz this year but the company’s profitability is shrinking. Companies sell stock in order to grow yet the online marketplace for short-term rentals is forced by a technicality to trade publicly. And since a number of its 7 million non-exclusive listings used to justify market share are fraudulent, Airbnb’s product is really unhappy customers.

Doled out to employees as compensation, Airbnb equity is set to expire in 2020. If the company doesn’t go public this year, shares will be worthless. Sources like The New York Times cite equity expiration as the reason Airbnb will sell stocks to the public. Yet, after suffering a 41% to 96% drop in bookings in the first quarter, Airbnb spent $1.2 billion then borrowed another $2 billion that it must repay at up to 11% interest, proving it loses money!

The company claims to be worth $30 billion, a value based on equity Airbnb already divested. It’s raised $4 billion to date, not including recent high-interest loans, but profitability is sketchy. In 2018 Airbnb reportedly enjoyed a profit of $200 million. Then, in 2019, it lost $322 million according to The Wall Street Journal.

Airbnb stock isn’t worth anything. Discounting economic effects of COVID-19 and projecting 2018 profit but not 2019 losses, 20 years of net earnings dictate Airbnb is only worth $4 billion, the value of equity it already sold!

Novel clothes pin
Billions of dollars in financial lifelines thrown to Airbnb since 2019 have vanished into thin air. The company laid off 2,000 employees to clamp losses but still claims it’s worth $30 billion ahead of its December IPO

InvestorPlace published that Airbnb is worth more than Marriott (MAR), a hospitality stock showing a 70% difference between its 52-week high and low prices. That independent financial research firm also reports Airbnb is worth more than the top-three cruise lines combined because revenue doubled to $4.8 billion in two years and could eclipse MAR by 2024. But Marriott owns some hotels and Airbnb doesn’t: valued by revenue instead of by profit, Airbnb is selling homeowners’ properties including foreign real estate on a U.S. stock exchange!

Airbnb collects money for single-family homeowners inviting guests to share family spaces. Revenue Airbnb disclosed to the SEC in August includes guest payments to homeowners.

Airbnb Faces Legislative Reform

In response to Airbnb’s confidential statement filed in August for this IPO, forty-five housing organizations from three continents sent the U.S. Securities and Exchange Commission one letter voicing concerns about Airbnb’s finances, risks, and business practices. “The group highlighted…companies whose valuations proved to be “grossly inflated once their securities began trading publicly” like WeWork which lost 80% of its $47 billion value. It asked for a “comprehensive disclosure of risks which could have an adverse effect on its business” including disclosure of regulatory charges and its business practices, like the company’s response to 130 shootings happening at Airbnb properties since May 2019.

Airbnb isn’t worth $30 billion ahead of its $3 billion IPO this December. Valued for $4 billion in stock it sold to venture capitalists, Airbnb hasn’t earned any overall profit and faces declining market-share and new charges. Despite losses, projecting its one successful year proves it’s worth $4 billion. Airbnb already sold its $4 billion equity!