Real estate agents could comprise a disproportionately large stake, particularly if Airbnb offers equity to hosts.
Short-term rental platform Airbnb has announced plans to launch an initial public offering in 2020 — a disclosure linked to the firm’s ambition to turn hosts into partial owners, The New York Times reported.
Airbnb’s IPO is expected to be better received than the recent public offerings of some tech behemoths, including Uber and Lyft. And if special equity-sharing with hosts is part of the deal, the IPO could also chart a new way to cut more stakeholders in on the success of gig economy companies.
“Airbnb has something Uber and Lyft don’t have: a proven, sustainable business model,” Matt Kennedy, senior IPO market strategist with Renaissance Capital, told the San Francisco Chronicle. “It will be a refreshing change of pace to actually get a $30-billion-plus company that has some profits.”
Airbnb was valued at $31 billion by its investors in September 2017, Inc. reported.
The platform has popularized an alternative to traditional hotel rooms by allowing property owners and renters to market and lease units or rooms to travelers. But the company has also drawn scrutiny for allegedly worsening housing affordability and running afoul of local government regulations.
Some real estate agents now talk up a home’s potential to generate short-term rental revenue in showings. Drawing on their expertise, others have invested in or managed Airbnb rental properties. Real estate agents could end up comprising a disproportionately large share of the company’s owners, particularly if Airbnb offers equity to hosts.
Airbnb’s IPO announcement, made Thursday, followed a detailed business update that the firm published a day earlier, on Wednesday.
In that update, Airbnb reported booking more than $1 billion in revenue in the second quarter of 2019.
It also said it had more than seven million Airbnb listings in more than 100,000 cities, with about 8.2 million “guest arrivals” between July 2018 and 2019.
Hosts received prominent recognition in the update.
“At Airbnb, we know that our success depends upon making sure hosts are successful,” Airbnb said in the post. It later added that its “unique business model is generating substantial benefits for millions of hosts around the world,” including more than $80 billion in earnings for hosts since Airbnb’s launch.
In contrast to an update that touted a positive social impact and head-turning business metrics, Airbnb’s announcement a day later of its expectation to become a publicly-traded company was just one sentence.
The announcement, made in a press release, was followed by a longer sentence noting that the statement was made to comply with an SEC rule.
Citing three anonymous sources, The New York Times reported that the terse IPO announcement was related to Airbnb’s continued consideration of offering equity in the company to hosts.
Under securities law, Airbnb has to unveil plans to go public before it can offer equity to hosts, the Times reported.
In the past, Airbnb has asked the SEC to expand an exemption that lets companies offer stock to employees without going public.
It wants the same exemption to apply to handing stock to people with “substantial but nontraditional relationships” with the stock-issuing company, the Wall Street Journal reported in 2018. This would enable the company to turn hosts into owners without becoming subject to the regulations and disclosure requirements that come with being a publicly-traded company.