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Airbnb Made Q3c Profit Despite Pandemic Hit, Shows Its IPO Filing


11/17/2020


Airbnb Made Q3c Profit Despite Pandemic Hit, Shows Its IPO Filing
The peer to peer home rental startup Airbnb Inc had turned up a profit in the third quarter despite the pandemic hit to the travel and tourism industry, showed data from the company’s initial public offering (IPO) registration.
 
Its IPO is amongst the most anticipated stock market debuts in recent years.
 
After the coronavirus pandemic outbreak worldwide severely weighed down on its core home rental business during the first half of the year, the company stages a dramatic recovery in the third quarter showed the filing which was published prior to the anticipated stock market debut in December of Airbnb.
 
The company was forced to cut 25 per cent of its workforce in May because of the pandemic induced slump in business as well as suspension of its marketing activities for the complete year. It also approached its investors, including Silver Lake and Sixth Street Partners, for an emergency funding of $2 billion. The company valued itself at $18 billion at the time of seeking the funding.
 
The company managed to stage the recovery by focusing its business on listing homes that were away from the crowded cities which people wanted to rent during the pandemic.
 
During the third quarter, the company saw a fall in revenue of 18 per cent, at $1.34 billion, compared to the same period a year ago. However it made a net profit of about $219 million primarily by reducing its expenses.
 
Compared to the United States Airbnb’s foreign business was hit harder by the pandemic which was reflective of the economic impact of the extended period of lockdowns due to the pandemic in Europe imposed to prevent the spread of infections.
 
"The recovery in the second and third quarters of 2020 is attributable to the renewed ability and willingness for guests to travel, the resilience of our hosts, and relative strength of our business model," Airbnb said.
 
Airbnb’s listing in December would mark a very positive year at the stock market for IPOs with companies capitalizing on a stock market rally in the second half of the year which was spurred by monetary as well as fiscal stimulus announced by governments to combat the economic impact of the pandemic.
 
Since its launch in 2008, Airbnb has not been able to make an annual profit and has warned that this year too it is likely not going to make a profit despite notching up a profit in the third quarter. In the fourth quarter, a decline in bookings and rise in cancellations is expected by the company, it said.
 
The filings also showed that a hefty tax bill was being faced by the company. It owed $1.35 billion, plus penalties and interest, in taxes related to the sale of international intellectual property to a subsidiary in 2013, the company was informed in September by US Internal Revenue Service, it said.
 
It would "vigorously contest" the tax adjustment, Airbnb said.
 
(Source:www.cnbctv18.com)


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