Airbnb lost hundreds of millions of dollars last year as the home-sharing business attempted to address widespread safety and security issues on its platform.
The news comes as investors and executives gearing up for a planned public offering this year. The company lost $322 million in the first nine months of 2019, a drastic swing from the $200 million profit it generated during the same time period in 2018, according to the Wall Street Journal, which first reported the massive loss.
In the third quarter of 2019, Airbnb’s revenue reportedly increased more than $400 million from the previous year to $1.65 billion, generating $266 million net profit. But the gains were outpaced by expenses, which spurred deep losses in the first half of the year.
The company, which is backed by CapitalG and TCV, has a private market valuation of $31 billion. But more recently, the company received an internal valuation much lower, the Journal reported.
Growing expenses have been linked to security and safety issues on its platform, and on upgrading its technology, according to the report. The company plans to spend $100 million verifying more than 7 million listings following a string of safety incidents, including a fatal shooting in California.
Another growing cost is administrative expenses, largely linked to the running of its San Francisco headquarters, which totalled $175 million in the first nine months of last year. Belinda Johnson, Airbnb’s chief operating officer, is leaving her post next month, and will join the company’s board.
More recently, the coronavirus has also hit Airbnb’s China business, which is reportedly down 80 percent from the same time last year.
The firm just entered skirmishes with contractors, and last week filed a lawsuit against a Miami-based partner that is working on a so far unsuccessful concept to launch branded apartments.
As a money-losing company, Airbnb faces entering the public markets as an unprofitable startup, much like Uber, Lyft and WeWork; the latter never went public. But Airbnb remains flush with cash, with almost $3 billion cash on hand, the Journal reported. [WSJ] — David Jeans