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!
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.