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Comment by iliekcomputers | Hacker News Reader

I would have expected them to postpone for sure, given COVID. Does anyone have any ideas on why they didn't postpone? Could it just be them expecting that it'll get much worse?

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> Does anyone have any ideas on why they didn't postpone?

If Airbnb has handed 10 year expiring stock options to core employees, then they're right at the cusp of expiring this year.

I would guess it doesn't affect anyone who opted for an 83B early on, but for those who held onto them without exercising them on the pennies might be very unhappy without a 2020 IPO.

It feels like a different era now, but this was discussed in detail in late 2019 [1].

The discontent has been exacerbated because Airbnb, which has been valued at $31 billion, doled out two tranches of employee equity that are set to start expiring in November 2020 and in mid-2021; those shares will become worthless if the company is not trading publicly by then, they said.

[1] - https://www.nytimes.com/2019/09/20/technology/airbnb-employe...

Couldn't they grant new options to the employees whose options expire?

An IPO seems like a pretty big hammer for that particular nail.

Granting new options causes tax headaches: If strike price << fair market value, you get taxed immediately on the illiquid gains.

At granting? I get annual option from my $10B+ annual revenue employer (where strike price < current stock price) and I don't pay tax until the options vest and I choose to exercise. Then I just sell-to-cover.

That depends on the type of options. Some are only taxable at exercise.

> employee equity that are set to start expiring in November 2020 and in mid-2021; those shares will become worthless if the company is not trading publicly by then

I'd say you nailed it on the head. Because aside from this, it's pretty terrible timing for an industry that's been killed by the virus and won't rebound until it's long over.

Not really. Airbnb has fully recovered, same as VRBO (which is growing about 60% YoY) and having proven that the business has been resilient even during the pandemic can be a good story for the IPO. https://www.financial-world.org/news/news/business/6074/cali...

> Airbnb has fully recovered

That just makes no sense given record unemployment and virus still very much prevalent! Travel and tourism are still significantly below average across the globe.

Re: VRBO... this quote "One of Airbnb's biggest competitors is Vrbo, owned by Expedia Group. The company doesn't break out Vrbo's individual results, but noted it returned to bookings growth in June." I believe is plainly misleading. I'd suggest that the "growth in June" is simply compared to the 80-90% decline from the spring's total lockdown, and likely only a 10-20% increase from that bottom.

The Airbnb report celebrating 1M bookings worldwide is still significantly below the norm (i.e. probably around 10% - tho I can't find clear stats) especially for the summer - so it hasn't "fully recovered" by a long shot.

The recovery is very surprising and counterintuitive so you are right to be skeptical.

Here's some additional datapoints:

- Similarweb traffic: VRBO traffic is above February traffic levels https://www.similarweb.com/website/vrbo.com/

- Airbnb traffic shows a V shaped recovery https://www.similarweb.com/website/airbnb.com/#overview

- VRBO drives Expedia group recovery https://www.bizjournals.com/austin/news/2020/07/07/expedia-g...

- Airbnb shows unexpected growth https://fortune.com/2020/06/30/airbnbceo-brian-chesky-bookin...

- May article showing early signs of V-shaped recovery https://www.prnewswire.com/news-releases/airbnb-booking-data...

- "Airbnb saw more nights booked for U.S. listings between May 17 and June 3 than the same period in 2019, and a similar boost in domestic travel globally." https://www.bloomberg.com/news/articles/2020-08-12/airbnb-re...

That’s questionable. Shares don’t expire, options do. And options can be exercised at will anytime before expiry, with or without an ipo.

sure, but how are they going to pay the AMT tax on that? options from 10 years ago are in the $0.XX range and 409a FMV today even after the drop is like $58

How does an ipo help with that ? if you have options, you have to face tax consequences when you exercise them with or without an ipo.

b/c you can sell them at that point, the shares today are illiquid and they'd probably have to do something like a prepaid variable forward to be able to afford to exercise and pay tax (~23% of FMV - strike price) we're talking millions of dollars for early employees who didn't do an 83b election.

once airbnb IPOs they could do either of the following:

* Cashless (exercise and sell to cover: sell enough of your shares to cover the purchase price and applicable fees and taxes.

* Cashless (exercise and sell): sell it all

You clearly know more about this since it affects you personally. But airbnb shares aren’t that illiquid. I purchased some myself in a secondary market. You might lose 5% to commission, which I guess is enough to want an ipo if you have a lot of money tied up there.

How/where can one purchase Airbnb shares? Is there a minimum amount needed to be purchased?

The minimum varies from $20k to $500k depending on platform and target company. Hard to find and in high demand shares are at the higher end.

Thanks. What platform/website is used to buy shares like this?

What site/market did you use? That's an interesting concept I had never heard of!

The company I used Equidate got renamed then acquired by sharespost. equityzen has lower minimum investments.

from friends who have sold its more in the 15% commission range, there's also a fair amount of tax and legal headaches.

- replying to myself since there's a max threading depth on HN?

15% seems excessive...

You could probably find a buyer yourself and work directly with lawyers to make it happen at a much lower flat rate instead of commission if you have many millions worth.

There seems to be a few variables associated with loss of reply button... looks like it returned. Maybe minimum and maximum time limits, max thread depth, other person is Re-editing...

I would expect there to be money lenders willing to extend collateralised loans to finance the tax.

Generally, it's not extremely difficult to obtain liquidity if you are reasonably paper-rich.

they got a terrible loan when the market was going crazy in March and now have massive interest payments they’ll have to manage for who knows how long as a cash flow negative business.

in short they definitely need capital given how uncertain the travel market remains.

I'd imagine that they're in desperate need for more funding, as their valuation will have certainly gone down since the start of the pandemic. One of the big advantages of going public (apart from selling the equity) is that you get easier/lower cost access to loans. I can imagine Airbnb aggressively issuing bonds once they go public in order to stay afloat for the remainder of the pandemic.

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