AirBnB

Certainly not as bad as WeWork, but quite a fall from grace at the moment:

1 Like

I knew they were having a tough time but this paints a much worse picture than I expected.

The new funding isn’t as favourable as I expected either.

The funding comes at a steep price: $1 billion of debt with an interest rate of more than 10%

I guess we won’t be seeing an IPO this year, not with the loan (and potentially more loans required) on the balance sheet and this poor period.

1 Like

They also asked the Canadian government to bail out their hosts. Unbelievable.

The article states that AirBnB had been going aggressively after the Canadian government in an attempt to water down housing rules, etc, and then expect them to bail out their hosts.

Many of those hosts also completely leveraged themselves to buy multiple properties to rent out, in a get rich quick type scheme. They should be left to hang out and dry - it’s capitalism.

You take a crazy risk, you pay the price.

2 Likes

AirBNB’s rate is around the same as Carnival Cruise’s. I wonder what their projections are on things returning to normal. Is the 1 billion to help with a 3 months period, a shorter time period or a longer one.

Also the Saudi Sovereign fund has taken a big position in Carnival Cruises, wonder if they are looking at other companies like AirBNB and whether this is just interim funding whilst they work that out.

3 Likes

That’s mind blowing.

Saudis took big stakes in western oil companies as well, looks like they’re snapping up stakes in big players who took massive hits. They seem to go for quite risky bets though, but they probably take a 20-year view.

3 Likes

That’s Metro Bank sort of rate iirc.

2 Likes

Looks like a second round of funding is currently happening. More debt it seems.

Investor demand for Tuesday’s $1 billion financing deal, which will be debt only and won’t include equity or warrants, was more than $2.5 billion, according to the person familiar with the matter.

Potentially they could be raising over the $2bn they are trying to get. However it seems like this is straight up debt rather than a debt equity deal.

2 Likes

Private equity firm Silver Lake Partners has a major role in the deal, the person told Business Insider, while Bloomberg, which first reported news of the deal, reported that Apollo Global Management, Benefit Street Partners, Glade Brook Capital Partners, Oaktree Capital and Owl Rock Capital are also involved.

Silver Lake Partners are the ones that acquired Zoopla for ÂŁ2.2 billion in 2018.

AirBNB is looking at long-term lets as a way to function during these times according to teh Express’ Lettings agencies face fresh challenge as Airbnb scrambles to rescue business article.

2 Likes

Could be some strong synergies right there.

Close the loop and offer the complete end to end experience for renting a property. One company that does everything for you. Properties owners sign over the space just like they would to an agent, but a purely digital experience.

I guess similar to what the neo banks and firms like purple bricks have been doing.

I expect we are going to see some explosive innovation from AirBnB in the next few months. Maybe some of the debt is for buying up other firms? I doubt it as that would have been disclosed during the raise.

1 Like

More tough news coming from AirBnB. Contractors are being let go early and internships suspended.

Also a freeze on marketing spending while they figure out what to focus on.

While the contractor staff being let go isn’t that surprising (though it could have been handled better) it’s interesting to see they don’t have a plan in place yet.

After raising so much cash it seems odd there doesn’t seem to be a clear direction about what they are doing right now, I would have expected that to be in place in order for them to raise the capital!

Looks like a wait and see pattern for AirBnB, or at least until they are ready to announce what they have planned.

Another 25% of the 7,500 strong workforce is being laid off.

This is after the furloughed new employees in April. Potentially those who were furloughed are also part of the layoffs.

A few large VC and investment trusts have Airbnb in their portfolio, it’ll be interesting to see what valuation they give it.

1 Like