In the middle of an economy-killing pandemic, embattled home-sharing service Airbnb has miraculously raised $1 billion in fresh capital (a combination of debt and equities) from private equity firms Silver Lake and Sixth Street Partners, the company announced on Monday.
About $5 million of the new investment will go toward a coronavirus “Superhost relief fund,” launched by Airbnb recently to help hosts deal with the economic impact from COVID-19. The company said its cofounders have personally contributed $9 million to the fund, while employees have donated $1 million.
More importantly, investors are closely watching what the capital infusion means for Airbnb’s IPO, which is supposed to happen this year but has been left up in the air since the coronavirus outbreak.
A source told CNBC on Monday that Silver Lake and Six Street’s investments have no strings attached to Airbnb’s financial performance or “ability to go public by a specific date.” “There is no rachet or any other coercive terms,” the source said. “It’s attractive for Airbnb.”
Bloomberg reported that Airbnb is considering pushing back the IPO plan to 2021, citing people familiar with the matter. That will be a problem for some of Airbnb’s employees, though, as they hold stock options that expire this year and will miss the chance to cash out if the IPO is delayed.
Airbnb has yet to issue an update regarding its IPO timeline. Its latest public statement suggests that the company is focusing on surviving the pandemic in the short term in order to prosper in the long run.
“The coronavirus outbreak is causing travel restrictions and other disruptions that have a direct impact on the travel and tourism sector and beyond,” Airbnb spokesman Nick Papas said in a statement last month.
“Although nobody can know the extent of the impact that the coronavirus outbreak may have,” he added, “we believe that history shows that when global disruptions happen, the travel industry has bounced back in the long run.”
Last week, the Financial Times reported that Airbnb had recently lowered its internal valuation to $26 billion, a 16 percent discount from the $31 billion valuation at its latest funding round in 2017, as a result of global pause on leisure travel. In February, when China was at the peak of its COVID-19 outbreak, Airbnb saw booking volume plunge as much as 80 percent, per The Wall Street Journal. As the pandemic spreads to more countries in the ensuing weeks and led to the cancellation of the 2020 Tokyo Olympics (of which Airbnb is an official worldwide partner), the company has “racked up hundreds of millions of dollars in losses this year,” the Journal estimated.