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Law360 (November 16, 2020, 10:09 PM EST) -- Home-rental giant Airbnb filed for a $1 billion initial public offering on Monday, setting the stage for one of the year's most anticipated IPOs, guided by Latham & Watkins LLP and underwriters counsel Simpson Thacher & Bartlett LLP.
Airbnb Inc.'s $1 billion fundraising target is preliminary. Media reports have indicated that the company hopes to raise $3 billion, which would make it the year's second-largest U.S. IPO by an operating company after database software firm Snowflake Inc. raised $3.4 billion in September.
San Francisco-based Airbnb could finalize how many shares it plans to sell and at what price in the coming weeks. Based on a typical schedule, its IPO could price by mid-December.
While its public markets debut has been the subject of months of speculation, Airbnb's IPO filing provides the first detailed public view into its financial health and legal and business risks, and it describes details about the company's operations in its own words.
Airbnb, an online marketplace that connects people who want to rent out their homes with travelers looking for an accommodation in that locale, is not profitable. The company's financial disclosures show that it lost $696.9 million on $2.5 billion in revenue through the first nine months of 2020, compared with a $322.8 million deficit on $3.7 billion at the same time last year.
Airbnb acknowledged that its business took a hit in early 2020 as the coronavirus pandemic halted global travel. But Airbnb said business began to recover after a two-month slump as people began planning local vacations, using its platform to book reservations.
"People wanted to get out of their homes and yearned to travel, but they did not want to go far or to be in crowded hotel lobbies," the company told the U.S. Securities and Exchange Commission. "Domestic travel quickly rebounded on Airbnb around the world as millions of guests took trips closer to home."
Despite the rough start to the year, Airbnb rebounded to produce a third-quarter profit. The company reported earnings of $219.3 million on $1.3 billion in revenue for the quarter ended Sept. 30, its SEC filing shows.
The company is optimistic about business going forward.
"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 its SEC registration statement. "Our platform has proven adaptable to serve these new ways of traveling."
The company also acknowledged risks from the recent global rise in coronavirus infections, especially in Europe, where several countries have again imposed strict lockdowns.
"In light of the evolving nature of COVID-19 and the uncertainty it has produced around the world, we do not believe it is possible to predict the COVID-19 pandemic's cumulative and ultimate impact on our future business, results of operations, and financial condition," Airbnb told the SEC.
The company declined to comment beyond its SEC filing.
Airbnb is going public with a multiclass voting structure that contains four sets of shares, reserving added voting power for company founders. This practice is common among startups whose founders want to retain outsize control even after their company goes public.
Airbnb is selling the public Class A shares that carry one vote each, while reserving a separate set of Class B shares that grant 20 votes each for co-founders Brian Chesky, Nathan Blecharczyk and Joseph Gebbia, plus other company officials. The company is also creating sets of Class C and Class H shares that carry no votes.
Airbnb's expected debut will come amid a booming year for the IPO market, which has taken off along with broader financial markets that have benefited from interest rate slashing and other rescues by the Federal Reserve, plus various relief packages approved by Congress.
On Friday, food delivery company DoorDash Inc. filed an IPO, potentially joining Airbnb among high-profile IPOs that could price in December. The IPO market normally slows down after Election Day, though brief market windows can open before late-year holidays.
Airbnb was rumored IPO candidate in early 2020 before the pandemic hit. The company issued layoffs to cut costs and raised money in private rounds in April to sustain its business.
Airbnb is valued at $18 billion, according to venture capital database CB Insights. The valuation puts Airbnb in an elite category of private companies called unicorns, meaning they are valued at at least $1 billion. The company's top backers include venture capital firms Sequoia Capital, Founders Fund and private equity firms Silver Lake and Sixth Street Partners.
Shares of Airbnb will trade on the Nasdaq exchange under the symbol ABNB.
Airbnb is represented by a Latham team led by partners Tad Freese, Kathleen Wells and Anthony Richmond.
Morgan Stanley & Co. LLC. Goldman Sachs & Co. LLC, Allen & Company LLC, BofA Securities, Inc., Barclays Capital Inc., Citigroup Global Markets Inc., BNP Paribas Securities Corp., Mizuho Securities USA LLC, Credit Suisse Securities (USA) LLC, Deutsche Bank Securities Inc., Jefferies LLC, and Wells Fargo Securities, LLC are lead underwriters for Airbnb's IPO.
The underwriters are represented by a Simpson Thacher team led by partner Kevin Kennedy.
--Editing by Alanna Weissman.
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