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Airbnb files for IPO: What investors should expect next

Airbnb has filed to go public on the Nasdaq (under the ticker ABNB) before the end of the year. Yahoo Finance's Dan Roberts discusses.

Video Transcript

AKIKO FUJITA: OK, let's talk about another company that we're watching very closely, and that's Airbnb-- filing their S-1 paperwork there. We've been long anticipating this IPO. Dan, I know you've been watching this one very closely. Some interesting numbers to point out here for the company-- 4 million hosts, 86% of those hosts outside of the US. And I guess the key marker that a lot of investors are going to be looking for, Dan, is the profitability here. Zack.

ZACK GUZMAN: Yeah, I mean, the profitability question has been there. And we talked about this with DoorDash too. I mean, this is something that we are always very interested in when we get the S-1's is trying to figure out whether or not these companies are getting closer to profitability or farther away from it. With Airbnb, though, we did get that look into how bad they were hit in terms of stays, as we know travel has been restricted here as the country and the world battles the coronavirus pandemic.

They gave us those numbers in that S-1. For the nine months going through September here, we saw gross booking values tumble there to $18 billion. That was down about 40% from last year. So that's the update there. They were kind of projecting, though, a little bit of a turnaround as Airbnb has kind of focused in on local stays with people maybe not traveling to hotels or going as far as they might have done before, but still boosting Airbnb when you think about how they've been able to weather that storm perhaps a little bit better than the hotels.

Airbnb's revenue for the third quarter was 1.3 billion. That was only down 18% from the same period last year when you just look specifically at Q3. So I mean, that's one of the question marks there. And I guess obviously when this company comes public, it's going to be the big question on investors' mind is how bad have they been hit due to the pandemic and what's it going to look like on the other side.

JARED BLIKRE: You know, I just want to jump in here with my quick take on the Airbnb IPO, which is, guess what, they're IPOing, because who would have thought that they would have been able to do this in March or April? They had to make a hard pivot. A lot of companies were not able to do it. They didn't really have the supply chain issues that a Beyond Meat or a Casper has.

But they did, in fact, learn and actually recognized through their system that people were traveling less, which is obvious, but they wanted to go someplace close to them-- so 30 miles away, 60 miles away, something like that. And Airbnb was able to pivot. Now, they had to cut their workforce by 25%, slash $800 million in additional marketing expenses. But here they are and they're coming to the table. So for me, it's impressive.

AKIKO FUJITA: Yeah. And, Jared, to that point, in that filing, Airbnb saying that they've gone from work from home becoming work from any home on Airbnb, talking about the big bump they got after the initial slump in the pandemic. Airbnb specifically saying, we believe that the lines between travel and living are blurring, and the global pandemic has accelerated the ability to live anywhere. Dan, you know, with any one of these tech filings, we always look for the key risk factors and they do talk about that, in terms of the revenue growth, saying that the revenue growth has slowed, and we expect it to continue to slow.

DAN ROBERTS: Yeah, exactly right. I was tweeting about this yesterday evening when the S-1 filing came out-- very long risk factors section for this company. But all of this is sort of to be expected with the decline in travel. Now, as Jared mentioned, the story here to me is how the company rebounded in Q3. And in some ways, the company can thank trends that it didn't create, but in some ways, the company also harnessed and jumped on those trends. So people are traveling in short distances. They're also staying for longer periods of time because of flexible work.

So as a result, even if air travel continues to remain where it is, and experts predict it won't get back to pre-pandemic levels until 2023, that's just fine for Airbnb. The company shared that as early as late April in the pandemic-- so basically right away after lockdowns started-- they were seeing a 20% shrink in the distance people were traveling from their home address to the Airbnbs they were booking. So, still traveling, and by Q3, as Jared mentioned, the company actually booked a profit. I mean, look at that.

So people are still going to Airbnbs, but they're doing it in drivable chunks. And when they go, they're able to stay for much longer periods of time because of flexible work. I mean, you know, it's not, oh, I need to be back home by Monday. Why bother? You can work from anywhere. Look at me, you can be on camera from anywhere. So people are doing week-long stays, two-week long stays. And in fact, Airbnb hosts responded to the trend as well-- half of hosts began offering discounts to people if they wanted to book a stay for a month or longer, which sounds like a very long stay.

But in the pandemic, I mean, why not do it, right? There is no real difference between a weekday and a weekend day, you're just working on the weekday, and you can work from anywhere. There was also a huge increase in local stays-- hyper-local stays on the home page. That is Airbnb, which has been so crazed always for its design, its aesthetic, changed the look of its landing page to show you right up front hyper-local stays. So you know, trends that just naturally, luckily benefit the company, and then the company quickly responding. First, it got hammered by the pandemic, then the trends, the shifts of the pandemic actually saved the company.

AKIKO FUJITA: And, Dan, to the point that you and Jared made, in many ways, the pivot that they have made during this pandemic sort of fits into their overall narrative, right? When you think about the origins of the company, launched in 2007 really during the Great Recession when Brian Chesky and Joe Gebbia were trying to make extra money and they started renting out their apartment. And it grew from that at a time when so many people were trying to make sort of extra income on the side. So surprising that they did, in fact, come to market in a year of some volatility. But in many ways, when you look at the narrative they are trying to sell, this fits right into it, Zack.

ZACK GUZMAN: And there's another narrative here too, which is that it's a big victory for NASDAQ getting this big IPO-- one of the big daddies we've been waiting for here in 2020, beating out the New York Stock Exchange to list Airbnb shares. So there you go. It's going to be the biggest one we've seen since Facebook doing it NASDAQ back in 2012.