Airbnb could choose direct listing over IPO in 2020 — ‘We don’t need the money,’ CEO says

The nontraditional lodging company that is shaking up the hotel industry is likely to take a nontraditional path to public markets in 2020.

Airbnb, the internet unicorn that was once expected to go public this year, has already built a war chest to run its business successfully, according to founder and CEO Brian Chesky, who told CNBC’s Jim Cramer Monday that the company can afford the luxury of patience.

“Most people that are really rushing to go public, the No. 1 reason they do is because they need the money. We don’t need to raise money, and so we haven’t been in a rush,” he said in a “Mad Money” interview.

Chesky was tight-lipped in the interview about whether the online home-rental marketplace was leaning toward an initial public offering, alternative public offering or a direct public offering to begin trading on the stock market. If the company chooses the latter, it would pass up on a cost-inducing IPO process that engages middlemen such as investment banks and underwriters.

Because Airbnb is in no rush to open its shares, it may opt for a direct listing, where a company underwrites its own securities to raise capital on public exchanges. Morgan Stanley and Goldman Sachs are rumored to be lead advisors on Airbnb’s probable direct public offering. The two investment banks were also involved in the direct placements for music streaming platform Spotify and messaging app Slack in their respective 2018 and 2019 listings.

“We’re not ready to announce anything, but you know the No. 1 reason that people do a traditional IPO is they need the money,” Chesky said. “We don’t need the money.”

Private investors value Airbnb at $31 billion, according to PitchBook. The company reported in September that its second quarter 2019 revenue came in above $1 billion for the second time in its history. It is unclear if or how close to profitability Airbnb may be.

Airbnb was expected to debut on Wall Street as part of a crowded 2019 IPO class that included highly anticipated firms such as Lyft and Uber. Their shares are down more than 40% and 35%, respectively, from their first public trades in the first half of 2019.

Airnb, launched in 2008, has raised $4.4 billion in venture capital through 15 funding rounds, according to Crunchbase.

“Our large shareholders, most of our large investors, have told us they intended to hold the stock for a long time and they actually were doing the opposite of pressuring us to go public,” Chesky said.

“We think next year will be the right time for us.”

Written by CNBC

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