Airbnb’s Cofounders Own Nearly 42% Of Covid-Dented Business, IPO Filing Shows

During a year when global travel has all but stopped due to the Covid-19 pandemic, Airbnb’s losses have soared despite efforts to keep its business afloat.

As it heads toward one of the largest IPOs of 2020, the San Francisco-based company lost nearly $700 million in the first nine months of this year — more than double the amount during the same period in 2019 — according to a company filing with the U.S. Securities and Exchange Commission disclosed Monday.

But amid steep losses, Airbnb posted operating profits of $219 million in the third quarter, a sign that its recent focus on domestic travel is paying off, according to the pre-IPO filing, known as an S-1. For the nine months ended September 30, Airbnb generated $2.5 billion revenue, a 32% drop year-over-year, while the total value of online bookings dropped 39% over the same period, to $18 billion.  

Taken together, the company said it is still too early to forecast the ultimate impact of the pandemic on its business, and said that it “is continuing to materially adversely impact our long-term operating and financial results.”

The company is expecting to raise $3 billion in its public market debut on NASDAQ, according to Bloomberg, making it one of the largest IPOs of 2020. The company said that as of September 30, it had over 4 million hosts — including 86% of hosts located outside of the United States — with more than 7.4 million listings of homes and experiences. 

Airbnb was founded in August 2008 in San Francisco by Brian Chesky, Nathan Blecharcyzk and Joe Gebbia. Currently, Chesky is chief executive of Airbnb, Gebbia is chief product officer, while Blecharcyzk is chief strategy officer and the chairman of Airbnb China.

The IPO will be a marked turnaround for a company that was nearly derailed when the Covid-19 pandemic virtually halted global travel. In April, Airbnb was forced to borrow $2 billion from lenders — including Silver Lake and Six Street Capital — at an $18 billion valuation, before laying off 25% of its workforce, or almost 2,000 people.   

Other vacation and travel companies have faced similar struggles to those at Airbnb during the pandemic. TripActions, a San Francisco-based corporate travel platform, was forced to borrow $125 million after it lost more than 90% of its revenue in March. Hospitality startup Sonder laid off or furloughed a third of its workforce before raising $170 million. Smaller travel startups, such as Stay Alfred, have closed. 

If other tech IPOs serve as any frame of reference, Airbnb’s IPO could go well for its major backers, which include Sequoia Capital and Andreessen Horowitz. Snowflake, which went public in early September, opened trading at $254 a share — more than double its initial list price of $120 — crowning three new billionaires on its IPO day. Palantir, which pursued a direct listing also in September, opened at $10, a 38% increase from its reference price. 

Ownership Stakes

The latest filing shows that Chesky has the largest individual stake with just under 15% of the company at 76.9 million shares, including 9.2 million stock options. Blecharczyk and Gebbia, meanwhile, each own 13.5% of the company, or 70 million Airbnb shares, including about 2.3 million in stock options.

 Using a valuation of $26 billion — a reported internal valuation of the home-sharing company in April when Covid-19 closures were still a major factor in the company’s operations — this would mean that Chesky’s stake is worth an estimated $3.5 billion, while Gebbia’s and Blecharcyzk’s stakes are worth $3.2 billion.

Chesky, Blecharczyk and Gebbia first became billionaires in March 2014, when Airbnb was valued at $10 billion. At the time, Forbes estimated that the three founders had personal stakes of just over 15% and net worths of $1.5 billion each. The company’s early investors include Sequoia Capital, Greylock as well as angel investments from Ashton Kutcher, LinkedIn cofounder Reid Hoffman and Amazon founder Jeff Bezos. 

And while Airbnb’s hosts won’t be receiving any cash bonuses or shares, the company is setting aside 9.2 million shares to assist hosts with services like education and providing financial aid. Those shares become effective once they reach $1 billion in value, according to Axios. According to the filing, Chesky will contribute over $100 million in Airbnb stock to the fund. Language in the S-1 also outlined Chesky’s intention “to donate the net proceeds from the initial equity compensation [the board] provide[s] to community, philanthropic and charitable causes,” though no further details were provided.

A Focus On Domestic Travel

Despite growing losses, Airbnb’s business showed some signs of resiliency. After seeing rising demand for domestic travel and staycations, which made up 77% of bookings in the first 9 months of 2020, the company focused on monthly stays and other products.

The company reported $8.2 billion in gross booking value in the third quarter, only 17% below 2019 levels. That’s a significant narrowing of its decline in bookings, after the value of bookings dropped 67% in the second quarter on a year-over-year basis.

However, Airbnb is bracing for the worst as travel is again declining with the emergence of another wave of Covid-19 infections, and is expecting bookings to again drop by the end of the year. “Similar to the impact of the initial COVID-19 wave in March 2020, we are seeing a decrease in bookings in the most affected regions,” the company stated.