Airbnb, the leading home-sharing platform, has filed for its IPO which is expected before the end of 2020. Investors have waited patiently for the opportunity to invest in a start-up which boasts a global brand but has also proven it can be profitable in its own right – unlike many of the tech unicorns that floated in 2019.
While it seem a strange time to go public given how hard the travel sector has been hit as a result of the coronavirus pandemic, the company showed it was able to bounce back in the third quarter of 2020. The recent confirmation of the IPO coincides with a positive set of preliminary vaccine results which have buoyed global stock markets and investor confidence.
A key reason for the IPO is to meet employee share obligations, which enable long-serving employees cash-in their shares. Start-ups generally choose to issue shares to the public to raise extra cash to fuel future growth, but Airbnb is in the enviable position where it has over $4 billion in cash on its balance sheet (it added a further $2 billion through two separate debt issues in April this year).
But unlike recent flops such as WeWork, Airbnb’s business model has proven it can generate a positive cash flow, which means the company can grow organically and not have to rely on external funding to survive.
