Ahead of its anticipated IPO next year, there’s some news out that might spook potential Airbnb investors: The company’s operating loss more than doubled in its first quarter, reports the Information. According to that report, Airbnb had an operating loss of $306 million in that timeframe.
I know: How does a tech company that doesn’t own or manage the properties it lists have that big of a loss? The answer, according to the Information, is it massively boosted the amount it spent on advertising and marketing during the quarter. The company reportedly increased its sales and marketing expenditure by 58% over the previous quarter. That amounts to a spend of $367 million in just three months.
As the Information points out, Airbnb’s increased spend on marketing isn’t unusual for a company that’s about to IPO. After all, it wants to boost sales as much as possible before its public offering to show potential investors it can bring in the cash. And as the Information notes, the marketing push seems to have had the desired effect: “Airbnb has said its revenue ‘substantially’ topped $1 billion in the second quarter of 2019,” the report says.
Still, with Lyft and Uber both having bumpy IPOs due to jittery investors, and WeWork having recently abandoned its IPO, it’s no surprise that a quarterly loss that more than doubles could give investors cause for concern.
Reached for comment, an Airbnb spokesperson sent the following statement:
“We can’t comment on the figures, but 2019 is a big investment year in support of our hosts and guests.”
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