Home-sharing site Airbnb posted a $4.6 billion loss for 2020 as it suffered from the pandemic downturn in travel and recorded one-time costs for becoming a public company.
In results released Thursday – Airbnb’s first as a publicly traded entity – the company took a charge of $2.8 billion for stock compensation related to the IPO. A year earlier, the company lost $674 million.
However, gross bookings for the fourth quarter ending December 31 were better than expected, indicating a strong rebound in demand for vacation rentals in North America as restrictions ease. Airbnb stock rose as much as 9 percent in early trading Friday.
Leisure travelers in the company’s biggest market stepped out to nearby locations that could be accessed by a car and are within 50 miles, lifting daily booking rates up by 13 percent, Airbnb said.
Home-sharing site Airbnb posted a $4.6 billion loss for 2020 in the pandemic
Even though the health crisis initially forced it to cut jobs, the U.S. vacation rental firm outperformed hotel operators who rely more on business travel, throughout 2020, thanks to its large share of ‘sun, ski, and suburban’ rental homes.
In late January, Airbnb said a survey it commissioned showed that just over half of Americans have already booked a trip or plan to travel this year.
Since the start of the pandemic, Airbnb has shifted its focus to beach towns and mountain destinations – outdoorsy places where the risk of contracting the coronavirus is perceived to be lower. The company expects rentals in big cities to come back last.
It has also slashed costs and jobs to ride out the pandemic, much like airlines and others in the travel industry.
CEO Brian Chesky said his company will benefit from changes in travel and jobs as many people work from somewhere other than the office – maybe a rental far from home.
‘When travel comes back, we believe it will look different than before,’ Chesky said on a call with analysts. ‘People are living more nomadically. Some people are taking longer-term stays, one or two months at a time in Airbnb.’
CEO Brian Chesky (right) said his company will benefit from changes in travel and jobs as many people work from somewhere other than the office, possibly from a long-term rental
The company is counting on adding hosts. It believes that people who book long-term rentals will also turn to Airbnb to rent their empty homes.
In the fourth quarter, Airbnb’s overall revenue fell 22 percent to $859 million, while adjusted loss excluding certain items shrank to about $21 million from $276.4 million, a year earlier, helped by cost cuts.
Analysts on average expected Airbnb to post revenue of $747.4 million and adjusted loss before interest, taxes, depreciation, and amortization of $122 million.
For all of 2020, Airbnb lost nearly $4.6 billion including the charge for stock-based compensation and a separate charge of $827 million for stock warrants tied to a loan.
Even as revenue increased, the company also lost money in 2017 and 2018 as it spent heavily on marketing and technology and added new lines to the business.
For all of 2020, Airbnb lost nearly $4.6 billion including the charge for stock-based compensation and a separate charge of $827 million for stock warrants tied to a loan
Despite the years of losses, Airbnb generated sky-high expectations from investors, which led to a winning debut on the stock market in December, when its shares more than doubled the San Francisco-based company´s target price and gave it a valuation of just over $100 billion.
At $3.7 billion, it was the biggest U.S. IPO in 2020, according to Renaissance Capital.
Airbnb faces challenges, including opposition from hotels. Some cities have stepped up restrictions on short-term rentals.
Critics say Airbnb contributes to higher rents and home prices in some markets.
Some of the company’s hosts aren’t just sharing their homes, they are turning them into businesses catering to tourists, reducing the supply of housing for local residents, according to some researchers.