Airbnb's losses reportedly doubled last quarter — and it could spell disaster for the company's attempt to go public


Airbnb's bid to go public in 2020 may face new hurdles as the home-share company reportedly boosted spending at the start of the year.

The company's losses doubled year-over-year in the first quarter as it spent more on marketing and sales, The Information reported Thursday. Airbnb increased sales and marketing spending to $367 million in the first quarter, setting the pace for yearly spending in the category to surpass the $1.1 billion sum from 2018.

Total expenses reportedly grew 47% in the first quarter, while revenue increased only 31% in the same period.

Airbnb's private status keeps outside investors from knowing exactly how much the company is profiting — or losing — on a quarterly basis. Yet the newly released information could raise questions about whether the company is earning enough to appeal to public investors.

Airbnb declined to confirm the increased spending, telling The Information only that "2019 is a big investment year in support of our hosts and guests."

The news arrives as Wall Street sours on money-losing unicorn companies. Peloton wiped out more than $900 million in investor wealth when it went public on September 26, marking the third-worst trading debut for a mega-IPO since the financial crisis. Lyft and Uber have both struggled to return to their initial offer price. SmileDirectClub is down more than 40% from its IPO price.

Several companies have even canceled their planned IPOs at the last minute. Hollywood conglomerate Endeavor cited market conditions when it pulled its offering the day before it was slated to trade publicly. WeWork indefinitely postponed its IPO after controversial CEO Adam Neumann stepped down and analysts scrutinized the company's core business.

Airbnb recently planned to hire Goldman Sachs and Morgan Stanley as advisors for a 2020 direct listing effort, Reuters reported in early October. The company has a $31 billion private valuation and would be among the largest companies to go public in 2020 if the listing occurs.

The unconventional approach to public markets would allow Airbnb to avoid the millions of dollars in underwriting fees associated with IPOs, as no new shares are offered in a direct listing. Spotify and Slack are among the large-cap tech firms to go public through direct listings.

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