The coronavirus outbreak in China could derail Airbnb Inc.'s attempt to going public in the next several quarters. It's a race against time for the online marketplace that arranges lodging, as slumping financials have led to steep losses and risks, a valuation correction.
Airbnb has taken notice of WeWork's implosion last fall, as it attempted to IPO but failed because of valuations concerns, ran out of cash several months later, and had to be bailed out by its largest investor, SoftBank.
WeWork has been a barometer of the VC and IPO bubble; all have deflated in the last five months.
A source told The Wall Street Journal that Airbnb recorded a $322 million net loss for the nine months through September, down from a $200 million profit a year earlier.
Investors with direct knowledge of the company said diminishing profitability could affect the company in obtaining a listing.
The new demand on Wall Street is a dash out of junk and into value, which means the era of growth stocks could be coming to an end.
Airbnb's valuation in its last funding round in 2017 was $31 billion, but there's concern among the sources that today's valuation could be significantly less.
Just look at what happened to Casper last week when it priced the IPO - the lost at least half of its value from the last funding round.
One person close to the company told the Journal that the coronavirus could delay the IPO because its Chinese segment is entirely down. Related: Armed Troops Storm El Salvador’s Parliament
Mainland China is a significant growth driver for Airbnb, but with two-thirds of the country's economy shut down, it has become a drag.
Another source told the Journal that Airbnb could IPO in Q3. Several months before, it would file the needed paperwork with the Securities and Exchange Commission to go public.
Airbnb's slumping profitability is creating concern within the management, sources said, though they added it has $3 billion in cash on its balance sheet.
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