Airbnb just filed for its IPO, and it named the ongoing pandemic and steadily declining revenue growth in a lengthy list of risk factors

Brian Chesky, Airbnb CEO

Summary List Placement

After over 12 years in business, Airbnb is finally going public.

The home-rental company filed a form S-1 for its IPO with the Securities and Exchange Commission on Monday afternoon. That included disclosing a trove of information that was previously unknown. For starters: Airbnb is over $2 billion in debt.

Read more: Airbnb’s Brian Chesky says what it was like to watch his company’s revenue plunge 80% in eight weeks and how he decided to go public anyway in exclusive interview

But that’s far from all the filing document has to offer — a section labeled “Risk Factors” details the major issues Airbnb believes it could face. We break down the most important of those potential issues below:

SEE ALSO: Airbnb publicly reveals its IPO filing, giving investors their first look at the travel giant’s finances as it tries to outrun the pandemic

1. The coronavirus pandemic has hurt Airbnb, and could continue to hurt the company.

With millions of people around the world staying home throughout 2020 as the coronavirus pandemic spread from country to country, Airbnb rentals dropped off a cliff.

The company took drastic measures to stem the bleeding: It cut its full-time workforce by a quarter (about 1,800 employees), cut marketing spend, and reduced costs overall. 

“The COVID-19 pandemic and the impact of actions to mitigate the COVID-19 pandemic have materially adversely impacted and will continue to materially adversely impact our business, results of operations, and financial condition,” the company said in the first of many risk factors listed in the S-1.

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2. Revenue growth is slowing, and the company expects it to continue to slow going forward.

Airbnb enjoyed a meteoric rise in popularity, and it’s unlikely to return to those levels of growth anytime soon. 

“We have experienced significant revenue growth in the past,” the company said. “However, our revenue growth has slowed in recent periods and there is no assurance that historic growth rates will return.”

For the last three years, revenue growth has declined steadily, and it fell sharply in the first nine months of 2020. 

 

3. Laws and regulations regarding temporary home rental vary from region to region, and are always in flux, and that could hurt Airbnb’s business.

Like Uber and other app-based startups that have exploded in popularity across the last decade, Airbnb has tangled with legislators and locals over how it does business.

“Since we began our operations in 2008, there have been and continue to be legal and regulatory developments that affect the short-term rental and home sharing business,” the filing says. “While we seek to work with governments, we have in the past, and are likely in the future to, become involved in disputes with government agencies regarding such laws and regulations.”

In some cases, like New York City, Airbnb says those regulations could result in a loss of revenue. In many cases, though, the laws simply do not exist yet to regulate short-term home rentals, and that means unknown risks.

4. Airbnb is deeply in debt, to the tune of nearly $2 billion.

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With a revenue of $2.52 billion …read more

Source:: Businessinsider – Tech

      

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