Is Airbnb ready for an IPO?

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Written by: Danica Radisic

In late January, Airbnb CEO Brian Chesky took to Twitter to announce that the company would “be sharing the biggest changes” to its platform in 10 years and would embrace what he’s calling an “infinite time horizon.” One of the largest tech unicorns to date seems to be preparing for what could be the biggest IPO of 2018.

Is an Airbnb IPO on the horizon at all?

Chesky’s tweet and months of rumors about the company’s profitability, have tech media and investors abuzz about a possible IPO for Airbnb in the next year or two — or somewhere on that “infinite time” horizon.

There has been speculation for months now that the home-sharing network might be preparing for public offering. In October 2017, Chesky confirmed as much in an interview with Fortune, saying the company will be “ready as absolutely soon as we can.”

Chesky also repeatedly pointed out, however, that Airbnb is “just 9 years old,” still developing, and that the company being ready for an IPO would not necessary signal the decision to go ahead with one.

In terms of readiness, Airbnb is clearly making moves that will position it for a public offering. After reaching full-year profitability in 2017, rumored to be at a small but steady $100 million in cash-flow profitability, the company just added seasoned American Express CEO Ken Chenault to its board.

This, and the manner in which the company has approached some more recent industry issues, clearly shows that Airbnb might very well be ready to play in the big leagues.

Prepare for the unicorn IPO stampede

What remains unclear is the role of Airbnb in the fears and expectations that have been haunting tech unicorns for the past several years. In addition to the over 200 existing tech unicorns to watch, a stampede of well-funded Chinese unicorns are expected to go public this year and next. The market capitalization of these lesser known but massive Chinese companies could surpass a combined quarter trillion dollars.

Many of these, and unpredictable market changes, could take some attention away from an Airbnb IPO, in particular Airbnb’s Chinese rival Xiaozhu, backed by the likes of Jack Ma’s Yunfeng Capital, Morningside Venture Capital and others. Though not in the same market, Xiaozhu hinted in October 2017 that the next step for the company is a public offering overseas, while the company is a unicorn in its own right at a valuation estimate of $1.50bn.

Nearly a year ago, in March 2017, Airbnb’s valuation stood at a whopping $31bn. A leading unicorn — or decacorn, which is what the cool kids are now calling companies with valuations of over $10 billion — Airbnb has been one of the companies with such astronomically rising valuations that has some analysts concerned with a new Dot-com bubble in the making and about to burst.

The new norm for tech unicorns going public is 11 years as of startup mode. Airbnb turns 10 in 2018. After seeing what we expect to see from Airbnb come March, taking into account the kind of growth and stability that the company has achieved over just the past two or three years, along with a seemingly strong growth strategy in place, one would be tempted to jump to the conclusion that the company is ripe for the public picking.

But let’s take a look at the flip side. Considering market volatility, the company’s own concerns with the speed of its growth and getting proper management and systems into place for an IPO, legislative issues to deal with in several major markets, as well as a slew of IPOs to be expected from tech companies and unicorns from around the world, the question begs to be asked — is Airbnb really ready and stable enough for a public offering?

And, perhaps more importantly, even if Airbnb is ready for an IPO, should it opt to stay private for better control and faster development of the new products and services it has planned? Unicorns may or may not be signaling the bursting of a barely visible bubble. Either way, young tech companies valued at over $1bn and growing might do well to choose stability over growth and cashing out over the next couple of years.