- The home-sharing startup Airbnb was most recently valued at $31 billion in a 2017 funding round.
- It’s had its valuation cut by a couple of its investors recently — the mutual-fund managers Principal Global Investors and Hartford Funds.
- The coronavirus pandemic has shut down travel, cutting into Airbnb’s revenues and raising questions about if people will want to open their homes to strangers once a vaccine for COVID-19 is introduced.
- Despite the pandemic, one mutual-fund investor, Macquarie, has increased its valuation of Airbnb since the virus broke out in the US.
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Several mutual-fund managers have slashed their internal valuations of the $31 billion home-sharing unicorn Airbnb.
The startup, founded by Joe Gebbia and Brian Chesky, has been hit hard by the coronavirus pandemic, which has halted travel worldwide. A recent story in The Wall Street Journal said Airbnb hosts who are reliant on the app for income were in danger of defaulting on their mortgages, and the market-research firm AirDNA estimated Airbnb saw $1.5 billion in bookings canceled in mid-March.
The startup’s equity is held by several mutual funds, though not all mutual-fund investors have updated their portfolio holdings since the end of March, when the virus’ impact was felt most intensely in the US. The mutual-fund managers Hartford Funds and Principal Global Investors, however, have made significant cuts to their internal valuations of the startup.
Hartford’s $744 million International Equity Fund said Airbnb’s shares were worth $85.27 each at the end of March — a decrease of more than 32% compared with fund’s valuation of the startup in the fall.
Principal’s $9.7 billion Large Cap Growth Fund, which Morningstar rates as five stars, cut its valuation of the startup by more than 30% from the end of February to the end of March. The manager values its equity in Airbnb at $81.36 per share.
Some of the industry’s biggest players, such as Vanguard and Fidelity, own the startup’s equity in their funds but have not yet updated their holdings to reflect the managers’ view on Airbnb after the pandemic.
One fund though, Macquarie’s Optimum Large Cap Growth Fund, believes the startup is worth more now than it was in the fall, when equity markets were near all-time highs. The $1.6 billion fund valued its shares of Airbnb at $116.03 each at the end of March — an increase of about $3 a share since the firm’s report at the end of September.
Hartford and Principal declined to comment, and Macquarie did not immediately respond to requests for comment.
Airbnb saw a huge upsurge in cancellations right after the outbreak was declared a pandemic and COVID-19 cases started to rise in the US. It’s also seen a big drop-off in new bookings as governments around the world have limited the movement of their citizens to try to contain the disease.
In recent weeks, Airbnb has raised $2 billion in debt financing as it tries to stay afloat during the crisis. It’s also been trying to keep its property managers above water, pledging some $265 million to them in the form of grants and partial reimbursements for cancellations.
In a statement to Business Insider, Airbnb said: “The global pandemic has required the country to shelter in place, upended the economy, led to unemployment figures last seen during the Great Depression and impacted everyone, including restaurants closing, hotels shuttered, airlines grounded, amusement parks shut, access to beaches and parks denied, conferences and festivals canceled, sporting events and concerts postponed, schools closed and graduations delayed. We believe that this is temporary: travel will bounce back over the long term and we are well-positioned to weather the storm and come back stronger.”