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After an IPO worth $3.5 billion, a company reports whopping loss of $3.9 billion in its first earning report

11:35 AM Feb 27, 2021 | FPJ Web Desk

This home rental firm was the biggest initial public offering (IPO) of 2020 in the US market. While the IPO price was $68 per share, it opened at $146 on the Nasdaq — making it one of the largest IPOs during the pandemic.

This company is Airbnb…

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The valuation of the firm reached a whopping $100.7 billion on the first day after the IPO. It is one of the largest among the unicorns of its time.

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It came with an IPO at the time when travel and tourism industry was hit due to the COVID-19 pandemic. But the investors saw value in it for long-term and got the valuation to soar. Ensuring the future growth, the company in its first financial report, which was announced on Thursday, it said that as restrictions gradually lift and borders begin to open, it expects there will be a significant travel rebound. “But when travel does return, we believe it will look different from before the pandemic. In 2021, travel will be less about where you go and when you go, and more about who you are with and what you can do together. We will see a shift from mass travel to meaningful travel,” the company stated.

In the first earning report after being listed, the company reported a 22 per cent drop in revenue and a whopping $3.9 billion loss in the last quarter of the year. Meanwhile, the net loss of the company in FY 2020 was $4.6 billion.

The company further added keeping in mind the depth of the pandemic, it had forecasted 2020 revenue could be less than half of what it was in 2019. But in the end, total revenue of $3.4 billion for 2020 decreased only 30% compared with $4.8 billion in 2019, the company stated. “In Q4 2020, revenue of $859 million declined only 22% compared with $1.1 billion in Q4 2019, despite the second wave of COVID-19 cases and lockdowns the world experienced in Q4.”

In addition, the company stated the charges associated with IPO and subsequent stock price increase contributed to their net loss in Q4 2020 and fiscal year 2020. “Upon our IPO in December 2020, we recognized a non-cash stock-based compensation expense of $2.8 billion. This is much larger than a typical quarter because at the completion of the IPO (similar to many other companies) we were required to recognize a significant portion of all stock-based compensation provided to Airbnb employees over the last several years,” the company added.

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