As the fear of the coronavirus disrupts travel, it could also derail Airbnb’s planned IPO. Airbnb was planning to start the IPO process around March or April, but now it may get pushed to 2021 according to Bloomberg.
Debuting an IPO during a potential global pandemic will concern investors who are already fretting over Airbnb’s losses from last year. The coronavirus outbreak will likely impact Airbnb bookings in the first half of 2020 and depending on how widespread the virus is, it could even hurt third-quarter results. Sources who asked not to be identified because they were sharing private information tell Bloomberg:
Airbnb has been letting guests and hosts cancel reservations in China, the epicenter of the virus, with no penalty up until April 1. This has slashed business in China by about 80%, compared with a year ago.
Airbnb spokeswoman Mattie Zazueta tells The Los Angeles Times that she doesn’t have information on whether cancellations are up. On the news, we are hearing conventions and large events being canceled almost daily. There is also uncertainty about the status of this summer’s Tokyo Olympics. Olympics-related bookings would have been a boost for Airbnb since the company struck a 9-year deal with the Olympics to be a global sponsor.
After a recent spate of negative publicity related to safety and scams, Airbnb’s business model will get vetted as issues will invariably emerge in a global crisis that will force the company to consider how best to arbitrate between competing stakeholders – guests and hosts – without alienating either one. The company’s best practices for cancellations and dispute mediation will be scrutinized and could result in further damages to the brand. Given an atmosphere supercharged with fear, there have been reports of discrimination by those using the platform. Airbnb’s Zazueta said the company “would investigate all reports of discrimination and take appropriate action when necessary, including up to the removal of users from the platform.”
There is internal pressure to proceed with the IPO in 2020 as some employees whose stock options will expire this year want to cash out, according to Bloomberg. Whether the IPO moves forward in 2020 or not, Bradley Tusk, a venture capitalist and former political strategist for Uber, suggests that the outbreak could give Airbnb ‘some narrative cover’ for delaying its listing or for its losses. He tells Bloomberg, “It’s not ideal, but in a weird way, if they were looking for something to blame a lack of profitability on this might actually provide a very convenient excuse.”
For a company reading for an IPO, the coronavirus outbreak that is disrupting travel worldwide and adding volatility to the stock market comes at the most inopportune time.
