| Hey, it's Olivia here. It's been a big couple days for tech companies gearing up to go public. On Tuesday, Palantir Technologies Inc. filed for a direct listing, joining a fall rush to the markets that will include data platform Snowflake Inc., software company Asana Inc. and delivery behemoth DoorDash Inc. But perhaps the most closely watched listing of them all will be Airbnb Inc. Just a few months ago, the company's bookings had fallen by 90% and it looked to be on the verge of getting wiped out by Covid-19. Now, it's filed for what's likely to be one of the biggest market debuts of the year. It's worth taking a look at how we got here. Before the pandemic, Airbnb was at its peak with billions in cash on hand and plans to go public via a non-traditional direct listing because it didn't need to raise any new money, it just wanted to let employees and investors cash out. When I asked to profile Chief Executive Officer Brian Chesky for a magazine feature in February, I was told to expect a long wait because he was such a hot commodity. But by mid-March, at the onset of the pandemic, Airbnb's bookings had been decimated. Come April, Chesky was kissing the company's $31 billion valuation goodbye. In May, he cried on a video conference as he laid off a quarter of his workforce. June, however, brought the first signs of a comeback, helped along by an uptick in travelers road-tripping to local vacation rentals. And last week, the company filed for an initial public offering. As a reporter covering Airbnb I've gotten whiplash over the past five months, so I can't imagine how investors are feeling. Even with signs of recovery, Airbnb rivals Booking Holdings Inc. and Expedia Group Inc. recently reported their lowest revenue in a decade as online travel stocks slumped. Airbnb itself reported a $400 million adjusted loss in the second quarter, people familiar with the company have said. So why go public now? A few reasons: - Early Airbnb employees and investors have been waiting more than a decade to cash out, and some have restricted stock options that will expire early next year.
- The latest billion-dollar funding deal with Silver Lake and Sixth Street Partners came with an 11% interest rate, usually reserved for companies in distress, and Airbnb will be keen to refinance and raise additional capital.
- The public markets are trading at record highs.
As Airbnb gears up for a (likely virtual) investor roadshow later this year, it will be able to point to several recent victories. The company turned a profit on earnings before interest, taxes and other expenses in 2017 and 2018. It has reined in spending: In the first quarter of this year, Airbnb clipped its marketing budget by 14% from the previous year. And more than 100,000 new guests in the U.S. have flocked to its platform as city dwellers take advantage of remote work and head to mountain towns, beach houses and lakeside camps for week-long stays. In July, consumer spending at Airbnb was 22% higher than the year before, according to e-commerce research company Edison Trends. But of course, there are complications. "A lot of young people are finding nightclubs and bars are shut down so they're renting short-term rentals and throwing parties," says Ulrik Binzer, CEO of Host Compliance, which helps local governments navigate sharing economy issues. Between May and July, Binzer said more than 1,151 party and noise complaints were filed against the short-term rental properties listed in his database—a 290% increase from the same time a year ago. While an excess of parties may seem like a good problem to have, it could exacerbate Airbnb's ongoing tensions with local lawmakers, a real risk for the company. In response, Airbnb banned parties worldwide last week. Investors are hoping that Airbnb's ability to adapt to the various crises of 2020 will make a compelling pitch to the public markets this fall, and set it apart from the IPO scrum. "There's unprecedented demand for tech companies from retail investors and Airbnb is a very recognizable name; people know it like they know Coca Cola," said Zach Aarons, an Airbnb investor and co-founder of the venture capital property tech firm MetaProp. The combination of frothy markets, early investors keen to cash out and high interest rates has added to an urgency to go public, Aarons says. "They've got to get out and they've got to get out now." —Olivia Carville | 
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