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However, with the gradual shutdown control in the United States, Airbnb’s business actually fell to freezing point in April. Layoffs are only a matter of time.
At the beginning of May, Chesky announced a 25% job cut in an open letter, cutting nearly 1,900 employees. The layoffs in China have not yet been announced.
Airbnb’s business scope will also be cut. Chesky announced the shrinking of hotels and luxury projects (Hotels and Lux), suspension of transportation and entertainment business (Transportation and Airbnb Studios).
In his letter, Chesky told his employees that 2020 revenue will be less than half of 2019 revenue (4.8 billion US dollars). As a last resort, the company urgently raised 2 billion US dollars from the capital market.
In April, Airbnb raised $1 billion in financing from Apollo Global Management, Benefit Street Partners, Glade Brook Capital Partners, Oak Capital and Owl Rock Capital. However, the company’s internal valuation has been reduced by 16% from the 31 billion US dollars in the previous round of financing in 2017 to 26 billion US dollars.
The other is a $1 billion loan raised from private equity firms Silver Lake and Sixth Street in the form of debt stocks and equity financing, which includes a “priority lien” clause, meaning that if Airbnb Because of the default in the financial crisis, these bondholders will be paid first.
According to foreign media reports, the transaction includes secondary mortgage bonds and warrants with a 1% stake. The warrants obtained by the lender can be exercised at a valuation of US$18 billion. One billion U.S. dollars will be able to exchange for 5.5% of its equity, while 18 billion U.S. dollars is much lower than Airbnb’s internal valuation of 26 billion U.S. dollars in March.