*This is not financial advice. All content should be considered opinionated. We are not responsible for any of your gains and losses. I am neither a licensed nor registered financial expert. Please see a financial advisor before making investment decisions.

*This is not financial advice. All content should be considered opinionated. We are not responsible for any of your gains and losses. I am neither a licensed nor registered financial expert. Please see a financial advisor before making investment decisions.

With the travel industry being hit hard and recovery being far away, is it wise to invest in Airbnb as it goes public?

Recently, Airbnb was reported to have filed to go public. It’s expected that they’ll go public during the month of August amidst a bad time in the travel and tourism industry.

Currently, hotel operators are experiencing huge revenue declines as fewer people are traveling during these uncertain times. The airline industry is currently experiencing a slow recovery and it’s expected that they won’t be back to normal levels until 2023. Also, because remote work has removed the need for business travel, a huge chunk of business travel has been removed from the hotel industry. Being in the hotel industry, Airbnb has been experiencing similar effects as well.

Having a history of unprofitability, Airbnb was already in a rough spot from the beginning. The pandemic pushed them to levels of distress that they never saw coming. To cut costs, Airbnb had to lay off 25% of its workforce.

These layoffs have destroyed the culture that Airbnb had built for years, the culture of being family. Compared to other startups, Airbnb had a more positive culture. Those who continue to work for Airbnb and those affected by the layoffs see Airbnb as any normal business that cares more about money than their employees.

And these cost-cutting measures didn’t affect just employees but also contractors. According to a report, Airbnb has been firing contractors quietly. Because they are contractors and not employees, they couldn’t qualify for severance pay, putting them in a worse position. Many of these contractors chose to work for Airbnb because of their culture. Because of Airbnb’s recent actions, they share the new view employees and former employees of Airbnb have on the company.

With a ruined image and the struggle to remain operational during the pandemic, Airbnb is in one bad spot. Not only are they at risk of collapsing but the loss of culture will hinder Airbnb’s efforts to become more innovative in the future. Going public is Airbnb’s solution to raising more capital as many venture capitalists are looking to get their money out of unprofitable businesses before they collapse.

Taking a broader picture, this recession is Airbnb’s first recession as a large company. The company was founded during the 2008 Great Financial Crisis and grew during those hard times.

With intense cash burn, a broken culture, and being in the center of a struggling industry, investing in the Airbnb IPO will be very risky. One thing to remember about Airbnb is that they’re a platform, making their operations lean. They don’t own much property so they’re not sitting on assets that aren’t being used. Also, they don’t have many assets that they can sell for cash if things do get worse.

Invest wisely!