FILE – In this Feb. 22, 2018, file photo, Airbnb co-founder and CEO Brian Chesky speaks during an event in San Francisco. Thirteen years after its founders first rented air mattresses in their San Francisco apartment, Airbnb is making its long-awaited stock market debut. The home sharing company priced its shares at $68 apiece late Wednesday, Dec. 9, 2020 giving it an overall value of $47 billion. Starting Thursday, it will trade on the Nasdaq Stock Market under the symbol “ABNB.” (AP Photo/Eric Risberg, File)
Airbnb proved its resilience in a year that has upended global travel. Now it needs to prove to investors that it sees more growth ahead.
The San Francisco-based home sharing company makes its long-awaited debut on the public market Thursday. The company priced its shares at $68 apiece late Wednesday, giving it an overall value of $47 billion, according to a person with knowledge of the transaction who was not authorized to speak because the amount had not yet been made public. The shares will trade on the Nasdaq Stock Market under the symbol “ABNB.”
Airbnb raised $3.7 billion in its offering, making it the biggest U.S. IPO this year, according to Renaissance Capital, which tracks IPOs. The company had initially set a price range of $44 to $50 for it shares, but raised that to a range of $56 to $60 earlier this week indicating rising investor demand.
Airbnb’s listing comes a day after another San Francisco-based company, DoorDash, soared through it initial public offering, the second largest after Airbnb’s. DoorDash’s stock jumped 85.8% to close at $189.51. The meal delivery app raised $3.4 billion with its offering.
Airbnb wants to add more hosts and properties, expand in markets like India, China and Latin America and attract new guests.
First, it will need to recover. Airbnb — which has never posted an annual profit — said its revenue fell 32% to $2.5 billion in the first nine months of this year as the coronavirus forced travellers to cancel their plans. The company delayed its IPO — initially planned for the spring — and funded operations with $2 billion in loans. In May, Airbnb cut 1,900 employees — or 25% of its workforce — and halted programs not related to its core business, like movie production.
But in the months since, Airbnb’s business rebounded faster than hotels as travellers felt safer booking private homes away from crowded downtowns during the pandemic. In Miami, for example, short-term rental occupancy reached 83% in October, while average occupancy for hotels was 42%, according to STR, an accommodations data firm.
Airbnb said the number of nights and experiences booked, which plummeted 72% in April compared to year-ago levels, were down 20% in September. Airbnb debuted experiences — from cooking classes to surfing lessons — in 2016.
Airbnb now has 7.4 million listings, from castles to treehouses, in 220 countries. They are operated by 4 million hosts. The company controls around 39% of the global short-term rental market, according to Euromonitor. It’s the market leader in Europe but trails VRBO, a vacation rental company owned by Expedia, in North America.
Looking ahead, Airbnb thinks it could see a surge in business from people who are able to work remotely.
“We believe that the lines between travel and living are blurring, and the global pandemic has accelerated the ability to live anywhere,” Airbnb said in a recent financial filing.
It could also expand its offerings further into boutique hotels, as it signalled with its 2019 purchase of last-minute hotel room supplier Hotel Tonight.
Still, Airbnb acknowledges it will be difficult and expensive to attract new hosts and guests. Its revenue growth rate was already slowing in the years leading up to the pandemic.
“I do think the company will benefit from the pent-up travel demand once the vaccine is widely distributed, but why would someone want to buy into a travel-related, unprofitable business with slowing growth?” said Scott Rostan, the CEO of Training the Street, which advises Wall Street analysts.
Airbnb was born 13 years ago in the San Francisco apartment shared by Brian Chesky — now the company’s CEO — and Joe Gebbia, who leads its design studio and Airbnb.org, its charitable arm.
Chesky and Gebbia were looking for a way to subsidize their apartment. When they learned a design conference was coming to town and hotels were full, they set up a website — AirBedandBreakfast.com — and rented out air mattresses. They got three takers. In 2008, they formed a company with Nate Blecharczyk, a software engineer.
Home sharing wasn’t new. VRBO was launched in 1995. Booking.com, another older rival based in Amsterdam, mainly offers hotel rooms but has also branched into vacation rentals.
What Airbnb did differently was focus on affordability, letting hosts rent out spare rooms and sofa beds, said Tarik Dogru, an assistant professor in the Dedman College of Hospitality at Florida State University who studies Airbnb. Guests strayed further into neighbourhoods than they would if they stayed at a hotel.
“Airbnb offered that feel of authenticity for those who are looking for it,” Dogru said.
That has sometimes been a problem. The company has angered some cities, which accuse it of promoting overtourism and making neighbourhoods less affordable by taking housing off the market. Los Angeles, Paris and even Airbnb’s home city of San Francisco have passed laws restricting its rentals.
Airbnb’s rapid growth — the number of hosts and active listings grew more than 20% in both 2018 and 2019 — has also made it difficult for the company to ensure quality. Last November, Airbnb promised to verify all its listings to make sure they match the photos on its site. It also spent the last year removing party houses and tightening rules for guests after a deadly 2019 shooting at an illegal Airbnb house party in California.
Relationships with hosts and guests have been rocky at times. After multiple reports of racist behaviour targeting guests, Airbnb instituted a nondiscrimination statement that all guests and hosts must sign. It won’t display a guest’s profile photo until a property is booked, so a host can’t deny a room based on a guest’s race.
And earlier this year, hosts revolted after the company let guests cancel bookings and get full refunds due to the pandemic. Airbnb responded by promising $250 million to hosts to help make up the shortfall.
Cary Gillenwater, a university professor and Airbnb host in Duivendrecht, The Netherlands, said the company didn’t provide much financial assistance to him, even though he let many guests cancel without penalties.
Gillenwater usually makes more than $21,000 each year renting out a room on his property with its own entrance. This year, he’ll be lucky to make $2,500. He’s looking into renting the room to office workers to use during the day.
Despite his experience, he’s considering investing in Airbnb and thinks it will continue to grow. Home sharing is invaluable for his family of five, he said, because it’s difficult to find hotel rooms that are large enough.
“I feel like there is a future for them, but we have to get through all this first,” he said.
TOKYO (AP) — Japanese technology group SoftBank swung back to profitability in the July-September quarter, boosted by positive results in its Vision Fund investments.
Tokyo-based SoftBank Group Corp. reported Tuesday a fiscal second quarter profit of nearly 1.18 trillion yen ($7.7 billion), compared with a 931 billion yen loss in the year-earlier period.
Quarterly sales edged up about 6% to nearly 1.77 trillion yen ($11.5 billion).
SoftBank credited income from royalties and licensing related to its holdings in Arm, a computer chip-designing company, whose business spans smartphones, data centers, networking equipment, automotive, consumer electronic devices, and AI applications.
The results were also helped by the absence of losses related to SoftBank’s investment in office-space sharing venture WeWork, which hit the previous fiscal year.
WeWork, which filed for Chapter 11 bankruptcy protection in 2023, emerged from Chapter 11 in June.
SoftBank has benefitted in recent months from rising share prices in some investment, such as U.S.-based e-commerce company Coupang, Chinese mobility provider DiDi Global and Bytedance, the Chinese developer of TikTok.
SoftBank’s financial results tend to swing wildly, partly because of its sprawling investment portfolio that includes search engine Yahoo, Chinese retailer Alibaba, and artificial intelligence company Nvidia.
SoftBank makes investments in a variety of companies that it groups together in a series of Vision Funds.
The company’s founder, Masayoshi Son, is a pioneer in technology investment in Japan. SoftBank Group does not give earnings forecasts.
Shopify Inc. executives brushed off concerns that incoming U.S. President Donald Trump will be a major detriment to many of the company’s merchants.
“There’s nothing in what we’ve heard from Trump, nor would there have been anything from (Democratic candidate) Kamala (Harris), which we think impacts the overall state of new business formation and entrepreneurship,” Shopify’s chief financial officer Jeff Hoffmeister told analysts on a call Tuesday.
“We still feel really good about all the merchants out there, all the entrepreneurs that want to start new businesses and that’s obviously not going to change with the administration.”
Hoffmeister’s comments come a week after Trump, a Republican businessman, trounced Harris in an election that will soon return him to the Oval Office.
On the campaign trail, he threatened to impose tariffs of 60 per cent on imports from China and roughly 10 per cent to 20 per cent on goods from all other countries.
If the president-elect makes good on the promise, many worry the cost of operating will soar for companies, including customers of Shopify, which sells e-commerce software to small businesses but also brands as big as Kylie Cosmetics and Victoria’s Secret.
These merchants may feel they have no choice but to pass on the increases to customers, perhaps sparking more inflation.
If Trump’s tariffs do come to fruition, Shopify’s president Harley Finkelstein pointed out China is “not a huge area” for Shopify.
However, “we can’t anticipate what every presidential administration is going to do,” he cautioned.
He likened the uncertainty facing the business community to the COVID-19 pandemic where Shopify had to help companies migrate online.
“Our job is no matter what comes the way of our merchants, we provide them with tools and service and support for them to navigate it really well,” he said.
Finkelstein was questioned about the forthcoming U.S. leadership change on a call meant to delve into Shopify’s latest earnings, which sent shares soaring 27 per cent to $158.63 shortly after Tuesday’s market open.
The Ottawa-based company, which keeps its books in U.S. dollars, reported US$828 million in net income for its third quarter, up from US$718 million in the same quarter last year, as its revenue rose 26 per cent.
Revenue for the period ended Sept. 30 totalled US$2.16 billion, up from US$1.71 billion a year earlier.
Subscription solutions revenue reached US$610 million, up from US$486 million in the same quarter last year.
Merchant solutions revenue amounted to US$1.55 billion, up from US$1.23 billion.
Shopify’s net income excluding the impact of equity investments totalled US$344 million for the quarter, up from US$173 million in the same quarter last year.
Daniel Chan, a TD Cowen analyst, said the results show Shopify has a leadership position in the e-commerce world and “a continued ability to gain market share.”
In its outlook for its fourth quarter of 2024, the company said it expects revenue to grow at a mid-to-high-twenties percentage rate on a year-over-year basis.
“Q4 guidance suggests Shopify will finish the year strong, with better-than-expected revenue growth and operating margin,” Chan pointed out in a note to investors.
This report by The Canadian Press was first published Nov. 12, 2024.
TORONTO – RioCan Real Estate Investment Trust says it has cut almost 10 per cent of its staff as it deals with a slowdown in the condo market and overall pushes for greater efficiency.
The company says the cuts, which amount to around 60 employees based on its last annual filing, will mean about $9 million in restructuring charges and should translate to about $8 million in annualized cash savings.
The job cuts come as RioCan and others scale back condo development plans as the market softens, but chief executive Jonathan Gitlin says the reductions were from a companywide efficiency effort.
RioCan says it doesn’t plan to start any new construction of mixed-use properties this year and well into 2025 as it adjusts to the shifting market demand.
The company reported a net income of $96.9 million in the third quarter, up from a loss of $73.5 million last year, as it saw a $159 million boost from a favourable change in the fair value of investment properties.
RioCan reported what it says is a record-breaking 97.8 per cent occupancy rate in the quarter including retail committed occupancy of 98.6 per cent.
This report by The Canadian Press was first published Nov. 12, 2024.
