Airbnb announces huge loss in first exit as public company
Home-sharing site Airbnb posted a loss of $3.9 billion in the fourth quarter of 2020 as it suffered from the pandemic slowdown in travel and incurred one-time costs to become a public company.
In results released Thursday — Airbnb’s first as a publicly traded entity — the company took on $2.8 billion in IPO-related stock compensation. A year earlier, Airbnb had lost $352 million.
Revenue fell 22% to $859 million in the quarter that ended Dec. 31. That was even more than analysts expected, according to a FactSet survey, and a much smaller percentage drop than that reported by rivals Expedia, Tripadvisor and Bookings Holdings.
Airbnb declined to offer earnings and revenue forecasts for 2021. Company executives said they were optimistic about a recovery, but said the unknown pace of vaccinations makes it difficult to know how quickly people will be. ready to travel. The company said revenue won’t decline as much in the current quarter as it did in the fourth quarter of last year.
In late January, Airbnb said a survey it commissioned showed just over half of Americans had already booked a trip or planned to travel this year.
Since the start of the pandemic, Airbnb has focused on beach towns and mountain destinations — outdoor locations where the risk of contracting the coronavirus is perceived to be lower. The company expects rentals in major cities to return last.
It has also slashed costs and jobs to ride out the pandemic, as have airlines and others in the travel industry.
CEO Brian Chesky said his company would benefit from changes in travel and jobs, as many people work away from the office – perhaps a rental away from home.
“When travel returns, we believe it will be different from before,” Chesky said in a call with analysts. “People are living more nomadically. Some people are taking longer stays, one or two months at a time in Airbnb.”
The company is counting on adding hosts. He believes that people who book long-term rentals will also turn to Airbnb to rent out their empty homes.
For all of 2020, Airbnb lost nearly $4.6 billion, including the charge for stock-based compensation and a separate charge of $827 million for stock warrants tied to a loan. This compared to a loss of $674 million in 2019. Even though revenue grew, the company also lost money in 2017 and 2018 as it spent heavily on marketing and technology and added new lines to the business.
Despite years of losses, Airbnb generated exorbitant expectations from investors, leading to a winning stock market debut in December, when its shares more than doubled the San Francisco-based company’s target price and it gave a valuation of just over $100 billion. At $3.7 billion, it was the largest U.S. IPO of 2020, according to Renaissance Capital.
Airbnb faces challenges, including opposition from hotels. Some cities have tightened restrictions on short-term rentals. Critics say Airbnb is contributing to higher rents and house prices in some markets. Some of the company’s hosts don’t just share their homes, they turn them into tourist-friendly businesses, reducing the housing supply for local residents, according to some researchers.
Ahead of the financial results release, the company’s shares fell 9.1% to close at $182.06. They were up less than 1% in after-hours trading.