4 ms·

> 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

by gopalv 6y ago

> 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-employees-ipo-payouts.html https://www.nytimes.com/2019/09/20/technology/airbnb-employe...

twblalock 6y ago
Couldn't they grant new options to the employees whose options expire? An IPO seems like a pretty big hammer for that particular nail.
- beambot 6y ago
  Granting new options causes tax headaches: If strike price << fair market value, you get taxed immediately on the illiquid gains.
  - refurb 6y ago
    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.
  - twblalock 6y ago
    That depends on the type of options. Some are only taxable at exercise.
canada_dry 6y ago
> 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.
- geronb 6y ago
  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/california-vacation-rental-airbnb-bookings-pick-up-cross-one-million-on-a-single-day/ https://www.financial-world.org/news/news/business/6074/cali...
  - canada_dry 6y ago
    > 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.
    - geronb 6y ago
      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/ https://www.similarweb.com/website/vrbo.com/ - Airbnb traffic shows a V shaped recovery https://www.similarweb.com/website/airbnb.com/#overview https://www.similarweb.com/website/airbnb.com/#overview - VRBO drives Expedia group recovery https://www.bizjournals.com/austin/news/2020/07/07/expedia-group-begins-recovery-vrbo.html https://www.bizjournals.com/austin/news/2020/07/07/expedia-g... - Airbnb shows unexpected growth https://fortune.com/2020/06/30/airbnbceo-brian-chesky-bookings-rentals-recovery-2020-ipo-coronavirus-pandemic/ 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-points-to-v-shaped-recovery-in-the-us-301056322.html 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-revenue-tanks-67-in-second-quarter-ipo-planned-for-2020 https://www.bloomberg.com/news/articles/2020-08-12/airbnb-re...
naveen99 6y ago
That’s questionable. Shares don’t expire, options do. And options can be exercised at will anytime before expiry, with or without an ipo.
- richiezc 6y ago
  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
  - naveen99 6y ago
    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.
    - richiezc 6y ago
      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
      - naveen99 6y ago
        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.
        sandeeps_ 6y ago
        How/where can one purchase Airbnb shares? Is there a minimum amount needed to be purchased?

by gopalv 6y ago

twblalock 6y ago

Couldn't they grant new options to the employees whose options expire? An IPO seems like a pretty big hammer for that particular nail.

beambot 6y ago
Granting new options causes tax headaches: If strike price << fair market value, you get taxed immediately on the illiquid gains.
- refurb 6y ago
  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.
- twblalock 6y ago
  That depends on the type of options. Some are only taxable at exercise.

canada_dry 6y ago

> 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.

geronb 6y ago
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/california-vacation-rental-airbnb-bookings-pick-up-cross-one-million-on-a-single-day/ https://www.financial-world.org/news/news/business/6074/cali...
- canada_dry 6y ago
  > 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.
  - geronb 6y ago
    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/ https://www.similarweb.com/website/vrbo.com/ - Airbnb traffic shows a V shaped recovery https://www.similarweb.com/website/airbnb.com/#overview https://www.similarweb.com/website/airbnb.com/#overview - VRBO drives Expedia group recovery https://www.bizjournals.com/austin/news/2020/07/07/expedia-group-begins-recovery-vrbo.html https://www.bizjournals.com/austin/news/2020/07/07/expedia-g... - Airbnb shows unexpected growth https://fortune.com/2020/06/30/airbnbceo-brian-chesky-bookings-rentals-recovery-2020-ipo-coronavirus-pandemic/ 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-points-to-v-shaped-recovery-in-the-us-301056322.html 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-revenue-tanks-67-in-second-quarter-ipo-planned-for-2020 https://www.bloomberg.com/news/articles/2020-08-12/airbnb-re...

naveen99 6y ago

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

richiezc 6y ago
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
- naveen99 6y ago
  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.
  - richiezc 6y ago
    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
    - naveen99 6y ago
      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.
      - sandeeps_ 6y ago
        How/where can one purchase Airbnb shares? Is there a minimum amount needed to be purchased?