Airbnb’s coronavirus crisis

Photo showing the Airbnb logo

Everything was supposed to come together for Airbnb in 2020. The hottest stock-market debut of the year. A valuation of more than $50 billion. Riches for hundreds of employees holding options expiring at year-end. And vindication for co-founder and Chief Executive Brian Chesky’s decision not to go public earlier.

The coronavirus pandemic has made all those scenarios next to impossible.

With global travel nearly at a standstill, the home-sharing giant is expected to lose $1 billion through the first half of the year, and its private-market valuation is dropping, according to people familiar with the company’s finances. On a videoconference with employees in late March, someone asked whether layoffs were coming. “Everything is on the table,” Mr. Chesky responded.

On Monday, the company said it was raising $1 billion from private-equity firms Silver Lake and Sixth Street Partners to bolster its financing. The funding comes at a steep price: $1 billion of debt with an interest rate of more than 10%, The Wall Street Journal reported Tuesday. Some investors declined to put in new money after Airbnb said it wouldn’t replace Mr. Chesky as chief executive, while others didn’t participate because they didn’t think the terms were favorable, according to people familiar with the terms of the deal. Silver Lake and Sixth Street Partners said they had faith in the business and existing leadership team.

Airbnb hasn’t addressed its plans for a public offering, but some of its investors don’t believe it will happen this year. “There’s no way,” said Matt Novak, a partner at London-based All Blue Capital.

Airbnb is now weighing plans to raise as much as $1 billion more in new financing, said the people familiar with the matter.

This is an excerpt from an article by Kirsten Grind, originally published on The Wall Street Journal

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