After the failed IPOs of Lyft and Uber, after the fall in WeWork’s value, investors decided they needed startups that were on their feet. They regard Airbnb as a safe haven, which could go public.
Airbnb announced that its revenues exceeded $1 billion in the second quarter. Both in 2017 and 2018, the company showed profit before taxes, interest and excluding depreciation, writes Financial Times (FT). And the Information analyzes the results of the first quarter of 2019: the operating loss amounted to $306 million, twice as much as a year ago.
FT sources claim that Airbnb has $3.5 billion in spare funds – a reserve in case of possible losses. They add that the company does not really need the money and that next year, instead of an IPO, the startup may conduct a direct listing. Chesky himself avoids questions about the IPO promised for 2020. “I have no news on this,” he told The New York Times (NYT) last week. “What we definitely don’t need now is to attract new funds.”
But although the company has not yet gone public, investor interest is quite high. Venture capitalists and brokers have created dozens of specialized funds that allow indirect trades in Airbnb shares. Investors in such funds do not own the shares themselves, but the rights to receive proceeds from them after the IPO. These derivatives have recently been trading at $150 per share for Airbnb, issued as part of its share capital. This implies an $11 billion premium to the company’s $31 billion valuations, which it received during the last round of investments in 2017 when it raised $1 billion. In total, according to Crunchbase, since its foundation in 2008, the company has raised $4.4 billion. investments from 54 investors, mainly Y Combinator, Sequoia Capital, Andreessen Horowitz, Greylock Partners. Check more about average rental income data at the theshorttermshop.com.
Airbnb itself does not like the actions with its shares in the private secondary market, including the transfer of options by employees as collateral for loans. “Such transactions are “transactions that have not been approved by our company and generally violate our internal rules,” she said. But such deals are increasingly attractive to hedge funds looking for additional investment opportunities, while stocks in the US stock market are already quite expensive, explains FT.
What Airbnb is criticized for
The startup Airbnb is criticized by many. Ordinary people are unhappy that a neighbor’s apartment is turning into a walk-through yard. The owners of the premises themselves blame Airbnb for not verifying residents. In California, Airbnb rented a room supposedly to meet 12 relatives. But instead of cozy family gatherings, they called a party with a hundred guests – to celebrate Halloween on October 31st. One of the guests started shooting, killing five people. To reassure customers, Airbnb has banned party rentals through its website in the United States. And last week, Chesky promised to check all seven-plus million properties in a year for compliance and security to restore confidence. Starting next year, the company will have a hotline for reporting problems with rented housing and a rapid response team.
Authorities are sharpening their teeth too – Airbnb helps homeowners avoid paying taxes. In Nashville, Tennessee, officials issued a decree stating that daily rentals are the same as the hotel business. Airbnb spent $225,000–350,000 on lobbying services and forced officials to sign an agreement that unlike hotel guests, its clients would not be charged a 5% tourist tax. A little more lobbying – and in May 2018, the Tennessee State Parliament passed a law not to confuse housing and hotel rentals. Listen the podcast about Airbnb and their tax data at the https://www.bbc.co.uk/programmes/m000nbzb
The confrontation with the authorities of New Orleans developed in a different way. Three years ago, Airbnb agreed with them that it would collect taxes from homeowners and transfer them to the city. As a guarantee, the service disclosed their names and addresses. But after a while, the officials decided that the city did not need daily renting of housing. In May 2018, they stopped issuing permits to citizens for this. In response, Airbnb has stopped reporting landlords to the authorities, although he assures that he regularly collects taxes from everyone and gives them to the treasury.