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Airbnb (ABNB)
NASDAQ:ABNB
Risk Overview Q4, 2024
Risk Distribution
34% Finance & Corporate
26% Legal & Regulatory
11% Tech & Innovation
11% Production
9% Ability to Sell
8% Macro & Political
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
This chart displays the stock's most recent risk distribution according to category. TipRanks has identified 6 major categories: Finance & corporate, legal & regulatory, macro & political, production, tech & innovation, and ability to sell.
Risk Change Over Time
S&P500 Average
Sector Average
Risks removed
Risks added
Risks changed
Airbnb Risk Factors
New Risk (0)
Risk Changed (0)
Risk Removed (0)
No changes from previous report
The chart shows the number of risks a company has disclosed. You can compare this to the sector average or S&P 500 average.
The quarters shown in the chart are according to the calendar year (January to December). Businesses set their own financial calendar, known as a fiscal year. For example, Walmart ends their financial year at the end of January to accommodate the holiday season.
The quarters shown in the chart are according to the calendar year (January to December). Businesses set their own financial calendar, known as a fiscal year. For example, Walmart ends their financial year at the end of January to accommodate the holiday season.
Risk Highlights Q4, 2024
Main Risk Category
Finance & Corporate
With 18 Risks
Finance & Corporate
With 18 Risks
Number of Disclosed Risks
53
-17
From last reportS&P 500 Average: 31
53
-17
From last reportS&P 500 Average: 31
Recent Changes
2Risks added
19Risks removed
18Risks changed
Since Dec 2024
2Risks added
19Risks removed
18Risks changed
Since Dec 2024
Number of Risk Changed
18
+18
From last reportS&P 500 Average: 2
18
+18
From last reportS&P 500 Average: 2
See the risk highlights of Airbnb in the last period.
Risk Word Cloud
The most common phrases about risk factors from the most recent report. Larger texts indicate more widely used phrases.
Risk Factors Full Breakdown - Total Risks 53
Finance & Corporate
Total Risks: 18/53 (34%)Below Sector Average
Share Price & Shareholder Rights8 | 15.1%
Share Price & Shareholder Rights - Risk 1
Under our restated certificate of incorporation, we are authorized to issue 2,000,000,000 shares of Class C common stock. Any future issuance of Class C common stock may have the effect of further concentrating voting control in the holders of our Class B common stock, including the Class B common stock held by our founders, and may discourage potential acquisitions of our business, and could have an adverse effect on the trading price of our Class A common stock.Changed
Share Price & Shareholder Rights - Risk 2
The multi-series structure of our common stock has the effect of concentrating voting control with certain holders of our common stock, including our directors, executive officers, and 5% stockholders, and their respective affiliates. This ownership limits or precludes other stockholders' ability to influence corporate matters, including the election of directors, amendments of our organizational documents, and any merger, consolidation, sale of all or substantially all of our assets, or other major corporate transaction requiring stockholder approval.Changed
Our Class A common stock has one vote per share, our Class B common stock has 20 votes per share, our Class C common stock has no votes per share, and our Class H common stock has no votes per share. Because of the 20-to-one voting ratio between our Class B and Class A common stock, the holders of our Class B common stock collectively continue to control a significant percentage of the combined voting power of our common stock and therefore are able to control all matters submitted to our stockholders for approval until all such outstanding shares of Class B common stock have converted into shares of our Class A common stock. Furthermore, our founders, who collectively hold a majority of the voting power of our outstanding capital stock, are party to a Voting Agreement under which each founder and his affiliates and certain other entities agree to vote their shares for the election of each individual founder to our board of directors. We and each of our founders are party to a Nominating Agreement under which we and the founders are required to take certain actions to include the founders in the slate of nominees nominated by our board of directors for the applicable class of directors, include them in our proxy statement, and solicit proxies or consents in favor of electing each founder to our board of directors. This concentrated control limits or precludes other stockholders' ability to influence corporate matters for the foreseeable future, including the election of directors, amendments of our organizational documents, and any merger, consolidation, sale of all or substantially all of our assets, or other major corporate transaction requiring stockholder approval. In addition, this may prevent or discourage unsolicited acquisition proposals or offers for our capital stock that stockholders may believe are in their best interest.
Transfers by holders of Class B common stock will generally result in those shares converting to Class A common stock, subject to limited exceptions, such as certain transfers effected for estate planning purposes or transfers among our founders, if all of our founders agree to such transfers. Each share of our Class B common stock is convertible at any time at the option of the Class B holder into one share of Class A common stock. The conversion of Class B common stock to Class A common stock will have the effect, over time, of increasing the relative voting power of those holders of Class B common stock who retain their shares in the long term. As a result, it is possible that one or more of the persons or entities holding our Class B common stock could gain significant voting control as other holders of Class B common stock sell or otherwise convert their shares into Class A common stock. In addition, the conversion of Class B common stock to Class A common stock dilutes holders of Class A common stock in terms of voting power within the Class A common stock. In addition, any future issuances of common stock would be dilutive to holders of Class A common stock. For example, because our Class C common stock carries no voting rights (except as otherwise required by law), if we issue Class C common stock in the future, the holders of Class B common stock may be able to elect all of our directors and to determine the outcome of most matters submitted to a vote of our stockholders for a longer period of time than would be the case if we issued Class A common stock rather than Class C common stock in such transactions. Further, each outstanding share of Class H common stock will convert into a share of Class A common stock on a share-for-share basis upon the sale of such share of Class H common stock to any person or entity that is not our subsidiary, which would dilute holders of Class A common stock in terms of voting power within the Class A common stock.
Share Price & Shareholder Rights - Risk 3
Our multi-series structure may have a material adverse effect on the market price of our Class A common stock.Our multi-series structure may result in a lower or more volatile market price of our Class A common stock, adverse publicity, or other adverse consequences. The multi-series structure of our common stock could make us ineligible for inclusion in certain indices and, as a result, mutual funds, exchange-traded funds, and other investment vehicles that attempt to passively track those indices may not invest in our Class A common stock. It is unclear what effect, if any, such policies and restrictions could have on the valuations of publicly-traded companies excluded from such indices, but it is possible that they may depress valuations, as compared to similar companies that are included, and could make our Class A common stock less attractive to other investors. As a result, the market price of our Class A common stock could be adversely affected.
Share Price & Shareholder Rights - Risk 4
We cannot guarantee that our share repurchase program will be utilized to the full value approved or that it will enhance long-term stockholder value.Our board of directors has authorized management to repurchase shares of our Class A common stock at management's discretion. Share repurchases may be made through a variety of methods, which may include open market purchases, privately negotiated transactions, block trades, or accelerated share repurchase transactions or by any combination of such methods. Any such repurchases will be made from time to time subject to market and economic conditions, applicable legal requirements, and other relevant factors. The manner, timing and amount of any share repurchases may fluctuate and will be determined by us based on a variety of factors, including the market price of our common stock, our priorities for the use of cash to support our business operations and plans, general business and market conditions, tax laws, and alternative investment opportunities, all of which may be further impacted by macroeconomic conditions and factors, including rising interest rates, and inflation, tariffs, global conflicts, and public health crises. Our share repurchase program authorizations do not have an expiration date nor do they obligate us to acquire any specific number or dollar value of shares. Our share repurchase programs may be modified, suspended, or terminated at any time, which may result in a decrease in the trading prices of our Class A common stock. Additionally, the Inflation Reduction Act of 2022 introduced a 1% excise tax on share repurchases, which increases the costs associated with repurchasing shares of our common stock. Even if our share repurchase programs are fully implemented, they may not enhance long-term stockholder value or may not prove to be the best use of our cash. Share repurchases could have an impact on our share trading prices, increase the volatility of the price of our Class A common stock, or reduce our available cash balance such that we will be required to seek financing to support our operations.
Share Price & Shareholder Rights - Risk 5
Anti-takeover provisions contained in our restated certificate of incorporation and amended and restated bylaws, as well as provisions of Delaware law, could impair a takeover attempt.Our restated certificate of incorporation and amended and restated bylaws contain, and Delaware law contains, provisions which could have the effect of rendering more difficult, delaying, or preventing an acquisition deemed undesirable by our board of directors. These provisions provide for the following:
- a multi-series structure which provides our holders of Class B common stock with the ability to significantly influence the outcome of matters requiring stockholder approval, even if they own significantly less than a majority of the shares of our outstanding Class A common stock, Class B common stock, Class C common stock, and Class H common stock;- a classified board of directors with three-year staggered terms, who can only be removed for cause, which may delay the ability of stockholders to change the membership of a majority of our board of directors;- no cumulative voting in the election of directors, which limits the ability of minority stockholders to elect director candidates;- the exclusive right of our board of directors to set the size of the board of directors and to elect a director to fill a vacancy, however occurring, including by an expansion of the board of directors, which prevents stockholders from being able to fill vacancies on our board of directors;- the ability of our board of directors to authorize the issuance of shares of preferred stock and to determine the price and other terms of those shares, including voting or other rights or preferences, without stockholder approval, which could be used to significantly dilute the ownership of a hostile acquiror;- the ability of our board of directors to alter our amended and restated bylaws without obtaining stockholder approval;- in addition to our board of directors' ability to adopt, amend, or repeal our amended and restated bylaws, our stockholders may adopt, amend, or repeal our amended and restated bylaws only with the affirmative vote of the holders of at least 66 2/3% of the voting power of all our then-outstanding shares of capital stock;- the required approval of (i) at least 66 2/3% of the voting power of the outstanding shares of capital stock entitled to vote generally in the election of directors, voting together as a single class, to adopt, amend, or repeal certain provisions of our restated certificate of incorporation and (ii) for so long as any shares of Class B common stock are outstanding, the holders of at least 80% of the shares of Class B common stock outstanding at the time of such vote, voting as a separate series, to adopt, amend, or repeal certain provisions of our restated certificate of incorporation;- the ability of stockholders to act by written consent only as long as holders of our Class B common stock hold at least 50% of the voting power of our capital stock;- the requirement that a special meeting of stockholders may be called only by an officer of our Company pursuant to a resolution adopted by a majority of our board of directors then in office or the chairperson of our board;- advance notice procedures that stockholders must comply with in order to nominate candidates to our board of directors or to propose matters to be acted upon at a stockholders' meeting, which may discourage or deter a potential acquiror from conducting a solicitation of proxies to elect the acquiror's own slate of directors or otherwise attempting to obtain control of us; and - the limitation of liability of, and provision of indemnification to, our directors and officers.
These provisions, alone or together, could delay or prevent hostile takeovers and changes in control or changes in our management.
As a Delaware corporation, we are also subject to provisions of Delaware law, including Section 203 of the General Corporation Law of the State of Delaware (the "Delaware General Corporation Law"), which prevents some stockholders holding more than 15% of our outstanding common stock from engaging in certain business combinations without approval of the holders of substantially all of our outstanding common stock.
Any provision of our certificate of incorporation, bylaws or Delaware law that has the effect of delaying or deterring a change in control could limit the opportunity for our stockholders to receive a premium for their shares of our common stock, and could also affect the price that some investors are willing to pay for our common stock.
Share Price & Shareholder Rights - Risk 6
Our restated certificate of incorporation and amended and restated bylaws provide for an exclusive forum in the Court of Chancery of the State of Delaware for certain disputes between us and our stockholders, and that the federal district courts of the United States will be the exclusive forum for the resolution of any complaint asserting a cause of action under the Securities Act, which could limit our stockholders' ability to obtain a favorable judicial forum for disputes with us or our directors, officers, or other employees.Our restated certificate of incorporation and amended and restated bylaws provide, that: (i) unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware (or, if such court does not have subject matter jurisdiction thereof, the federal district court of the State of Delaware) will, to the fullest extent permitted by law, be the sole and exclusive forum for: (a) any derivative action or proceeding brought on behalf of the Company, (b) any action asserting a claim for or based on a breach of a fiduciary duty owed by any of our current or former director, officer, other employee, agent, or stockholder to the Company or our stockholders, including without limitation a claim alleging the aiding and abetting of such a breach of fiduciary duty, (c) any action asserting a claim against the Company or any of our current or former director, officer, employee, agent, or stockholder arising pursuant to any provision of the Delaware General Corporation Law or our certificate of incorporation or bylaws or as to which the Delaware General Corporation Law confers jurisdiction on the Court of Chancery of the State of Delaware, or (d) any action asserting a claim related to or involving the Company that is governed by the internal affairs doctrine; (ii) unless we consent in writing to the selection of an alternative forum, the federal district courts of the United States will, to the fullest extent permitted by law, be the sole and exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act, and the rules and regulations promulgated thereunder; (iii) any person or entity purchasing or otherwise acquiring or holding any interest in shares of capital stock of the Company will be deemed to have notice of and consented to these provisions; and (iv) failure to enforce the foregoing provisions would cause us irreparable harm, and we will be entitled to equitable relief, including injunctive relief and specific performance, to enforce the foregoing provisions. Nothing in our restated certificate of incorporation or amended and restated bylaws precludes stockholders that assert claims under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), from bringing such claims in federal court to the extent that the Exchange Act confers exclusive federal jurisdiction over such claims, subject to applicable law.
We believe these provisions may benefit us by providing increased consistency in the application of Delaware law and federal securities laws by chancellors and judges, as applicable, particularly experienced in resolving corporate disputes, efficient administration of cases on a more expedited schedule relative to other forums, and protection against the burdens of multi-forum litigation. If a court were to find the choice of forum provision that is contained in our restated certificate of incorporation or amended and restated bylaws to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could materially adversely affect our business, results of operations, and financial condition. For example, Section 22 of the Securities Act creates concurrent jurisdiction for federal and state courts over all suits brought to enforce any duty or liability created by the Securities Act or the rules and regulations thereunder. Accordingly, there is uncertainty as to whether a court would enforce such a forum selection provision as written in connection with claims arising under the Securities Act.
The choice of forum provisions may limit a stockholder's ability to bring a claim in a judicial forum that it finds favorable for disputes with us or any of our current or former directors, officers, other employees, agents, or stockholders of the Company, which may discourage such claims against us or any of our current or former directors, officers, other employees, agents, or stockholders of the Company and result in increased costs for investors to bring a claim.
Share Price & Shareholder Rights - Risk 7
Our share price has been, and may continue to be, volatile, and the value of our Class A common stock may decline.The market price of our Class A common stock has been, and may continue to be, volatile and could be subject to wide fluctuations in response to the Risk Factors described in this Annual Report on Form 10-K, and others beyond our control, including:
- actual or anticipated fluctuations in our revenue or other operating metrics;- our actual or anticipated operating performance and the operating performance of our competitors;- changes in the financial projections we provide to the public or our failure to meet these projections;- failure of securities analysts to initiate or maintain coverage of us, changes in financial estimates by any securities analysts who follow our Company, or our failure to meet the estimates or the expectations of investors;- any major change in our board of directors, management, or key personnel;- the economy as a whole and market conditions in our industry;- rumors and market speculation involving us or other companies in our industry;- announcements by us or our competitors of significant innovations, new products, services, features, integrations, or capabilities, acquisitions, strategic investments, partnerships, joint ventures, or capital commitments;- the legal and regulatory landscape and changes in the application of existing laws or adoption of new laws that impact our business, hosts, and/or guests, including changes in short-term occupancy and tax laws;- legal and regulatory claims, litigation, or pre-litigation disputes and other proceedings;- the impact of pandemics, epidemics, or other health emergencies on the travel and accommodations industries;- other events or factors, including those resulting from war, incidents of terrorism, or responses to these events; and - sales or expected sales of our Class A common stock by us, our officers, directors, principal stockholders, and employees.
In addition, stock markets, and the trading of travel companies' and technology companies' stocks in particular, have experienced significant price and volume fluctuations that have affected and continue to affect the market prices of equity securities of many companies. Stock prices of many companies, including travel companies and technology companies, have fluctuated in a manner often unrelated to the operating performance of those companies. In the past, stockholders have instituted securities class action litigation following periods of stock volatility. If we were to become involved in securities litigation, it could subject us to substantial costs, divert resources and the attention of management from our business, and materially adversely affect our business, results of operations, and financial condition.
Share Price & Shareholder Rights - Risk 8
Our focus on the long-term best interests of our Company and our consideration of all of our stakeholders, including our hosts, guests, the communities in which we operate, employees, and shareholders, may conflict with short- or medium-term financial interests and business performance, which may negatively impact the value of our Class A common stock.Changed
We believe that prioritizing the long-term interests of our Company and stakeholders, including hosts, guests, the communities in which we operate, employees, and shareholders, will help ensure sustained success and long-term shareholder value. This focus may lead us to make decisions that negatively impact short- or medium-term business performance or the trading price of our Class A common stock, potentially making it less attractive to short-term investors. Our long-term strategies, such as enhancing platform trust and safety, improving community support, investing in relationships, and adapting to regulations, may not result in the long-term benefits that we expect, in which case our business, results of operations, and financial condition, as well as the trading price of our Class A common stock, could be materially adversely affected.
Accounting & Financial Operations3 | 5.7%
Accounting & Financial Operations - Risk 1
Our ability to use our net operating loss carryforwards and certain other tax attributes may be limited.Accounting & Financial Operations - Risk 2
We may experience significant fluctuations in our results of operations, which make it difficult to forecast our future results.Our results of operations can vary significantly and are not necessarily indicative of future performance due to seasonal fluctuations and other factors. We experience seasonality in our Nights and Experiences Booked and GBV, and seasonality in Adjusted Earnings Before Interest, Taxes, Depreciation, and Amortization ("EBITDA") that is consistent with seasonality of our revenue, which has historically been, and is expected to continue to be, highest in the third quarter when we have the most check-ins as it is the peak travel season for North America and EMEA. Revenue is recognized upon check-in, and as our business evolves, seasonal trends may change.
In addition, our results of operations may fluctuate as a result of a variety of other factors, some of which are beyond our control, including:
- reduced travel and cancellations due to events such as health concerns, including epidemics and pandemics, natural disasters, wars, political instability, regional hostilities or law enforcement demands, and other regulatory actions;- global macroeconomic conditions;- periods with increased investments in our platform for existing offerings, new offerings and initiatives, marketing, and the accompanying growth in headcount;- our ability to maintain growth and effectively manage that growth;- increased competition;- our ability to expand our operations in new and existing regions;- changes in governmental or other regulations affecting our business;- changes to our internal policies or strategies;- harm to our brand or reputation; and - other risks described in these Risk Factors and elsewhere in this Annual Report on Form 10-K.
In addition, we may not accurately forecast our results of operations due to timing differences between when bookings are made and revenue recognition, which occurs at check-in. For example, the effect of significant downturns in bookings in a particular quarter may not be fully reflected in our financial results until future periods due to this timing difference. Our expense levels are based on revenue estimates that may be inaccurate, and fixed expenses may lead to greater-than-expected losses if revenue falls short. Incorrect assumptions or failure to address risks could materially affect our business, results of operations, and financial condition.
Accounting & Financial Operations - Risk 3
Our results of operations and financial condition could be materially adversely affected by changes in accounting principles.The accounting for our business is subject to change based on the evolution of our business model, interpretations of relevant accounting principles, enforcement of existing or new regulations, and changes in policies, rules, regulations, and interpretations of accounting and financial reporting requirements of the SEC or other regulatory agencies. Adoption of a change in accounting principles or interpretations could have a significant effect on our reported results of operations and could affect the reporting of transactions completed before the adoption of such change. It is difficult to predict the impact of future changes to accounting principles and accounting policies over financial reporting, any of which could adversely affect our results of operations and financial condition and could require significant investment in systems and personnel.
Debt & Financing4 | 7.5%
Debt & Financing - Risk 1
We may raise additional capital in the future or otherwise issue equity, which could have a dilutive effect on existing stockholders and adversely affect the market price of our common stock. If we require additional funding to support our business, this additional funding may not be available on reasonable terms or at all.Debt & Financing - Risk 2
Our indebtedness could materially adversely affect our financial condition. Our indebtedness and liabilities could limit the cash flow available for our operations, expose us to risks that could materially adversely affect our business, results of operations, and financial condition, and impair our ability to satisfy our obligations under our indebtedness.In March 2021, we issued $2.0 billion aggregate principal amount of 0% convertible senior notes due 2026 (the "2026 Notes"). In addition, on October 31, 2022, we entered into a five-year unsecured revolving credit facility with $1.0 billion of initial commitments from a group of lenders ("2022 Credit Facility"). As of December 31, 2024, there were no borrowings outstanding under the 2022 Credit Facility, and we had total outstanding letters of credit of $19 million under the 2022 Credit Facility. We may also incur additional indebtedness to meet future financing needs.
Our ability to make payments under or to refinance our indebtedness, including the 2026 Notes, depends on our future performance, which is subject to economic, financial, competitive and other factors beyond our control. Our business may not generate sufficient funds, and we may otherwise be unable to maintain sufficient cash reserves, to pay amounts due under our indebtedness, including the 2026 Notes, and our cash needs may increase in the future.
Additionally, certain provisions of our 2026 Notes and related agreements could complicate or increase the cost for a third-party seeking to acquire us. Noteholders may require us to repurchase their notes for cash following a fundamental change, potentially straining our financial resources and leading to defaults under the indenture or other debt agreements.
In addition, the accounting treatment of the 2026 Notes as a liability and the use of the "if-converted" method for earnings per share calculations may negatively impact our reported financials.
Moreover, the capped call transactions entered into in connection with the pricing of the 2026 Notes may affect the value of our Class A common stock.
In addition, our existing credit agreement for our 2022 Credit Facility contains, and any future indebtedness that we may incur may contain, financial and other restrictive covenants, including a leverage ratio and fixed charge coverage ratio covenants, that limit our ability to operate our business, raise capital, or make payments under our other indebtedness. The covenants in the agreement governing our 2022 Credit Facility, among other things, limit our and our subsidiaries' abilities to (i) incur additional indebtedness at subsidiaries that are not guarantors of the 2022 Credit Facility; (ii) create or incur additional liens; (iii) partake in sale/leaseback transactions; (iv) engage in certain fundamental changes, including mergers or consolidations; and (v) enter into negative pledge clauses and clauses restricting subsidiary distributions.
If we fail to comply with these covenants or to make payments under our indebtedness when due, then we would be in default under that indebtedness, which could, in turn, result in that and our other indebtedness becoming immediately payable in full.
Operational Risks
Debt & Financing - Risk 3
If one or more of our counterparty financial institutions default on their financial or performance obligations to us or fail, we may incur significant losses or be unable to process payment transactions.We have significant amounts of cash, cash equivalents, and other investments, including money market funds, certificates of deposit, U.S. government debt securities, commercial paper, corporate debt securities, government agency debt securities, mortgaged-backed and asset-backed securities, with banks or other financial institutions in the United States and abroad for both our corporate balances and for funds held on behalf of our hosts and guests. We also rely on such banks and financial institutions to help process payments transactions. We have both significant funds flows from and to various financial institutions as a result of our processing of payments from guests to hosts. As part of our currency hedging activities on these balances, we enter into transactions involving derivative financial instruments with various financial institutions. We regularly monitor our exposure to counterparty credit risk and manage this exposure in an attempt to mitigate the associated risk. Despite these efforts, we may be exposed to the risk of default by, or deteriorating operating results or financial condition, or service interruptions at, or failure of, these counterparty financial institutions. If one of our counterparties were to become insolvent or file for bankruptcy, our ability to recover losses or to access or recover our assets may be limited by the counterparty's liquidity or the applicable laws governing the insolvency or bankruptcy proceedings. Furthermore, our ability to process payment transactions via such counterparties would be severely limited or cease. In the event of default or failure of one or more of our counterparties, we could incur significant losses and be required to make payments to hosts and/or refunds to guests out of our own funds, which could materially adversely affect our results of operations and financial condition.
Debt & Financing - Risk 4
Our failure to properly manage funds held on behalf of customers could materially adversely affect our business, results of operations, and financial condition.We offer integrated payments in approximately 50 currencies to allow access to guest demand from more than 220 countries and regions and the ability for many hosts to be paid in their local currency or payment method of choice. When a guest books and pays for a stay or experience on our platform, we hold the total amount the guest has paid until check-in, at which time we recognize our service fee as revenue and initiate the process to remit the payment to the host, which generally occurs 24 hours after the scheduled check-in, barring any alterations or cancellations, which may result in funds being returned to the guest. Accordingly, at any given time, we hold on behalf of our hosts and guests a substantial amount of funds, which are generally held in bank deposit accounts and in U.S. government money market funds and recorded on our consolidated balance sheets as funds receivable and amounts held on behalf of customers. In certain jurisdictions, we are required to either safeguard customer funds in bankruptcy-remote bank accounts, or hold such funds in eligible liquid assets, as defined by the relevant regulators in such jurisdictions, equal to at least 100% of the aggregate amount held on behalf of customers. Our ability to manage and account accurately for the cash underlying our customer funds requires a high level of internal controls. As our business continues to grow and we expand our offerings, we must continue to strengthen our associated internal controls. Our success requires significant public confidence in our ability to handle large and growing transaction volumes and amounts of customer funds. Any failure to maintain the necessary controls or to manage the assets underlying our customer funds accurately could result in reputational harm, lead customers to discontinue or reduce their use of our platform and services, and result in significant penalties and fines from regulators, each of which could materially adversely affect our business, results of operations, and financial condition.
Corporate Activity and Growth3 | 5.7%
Corporate Activity and Growth - Risk 1
We track certain operational metrics, which are subject to inherent challenges in measurement, and real or perceived inaccuracies in such metrics may harm our reputation and materially adversely affect our stock price, business, results of operations, and financial condition.Corporate Activity and Growth - Risk 2
The failure to successfully execute and integrate acquisitions could materially adversely affect our business, results of operations, and financial condition.We have acquired multiple businesses and we regularly evaluate potential acquisitions. We may expend significant cash or incur substantial debt to finance such acquisitions, which indebtedness could result in restrictions on our business and significant use of available cash to make payments of interest and principal. In addition, we may finance acquisitions by issuing equity or convertible debt securities, which could result in further dilution to our existing stockholders. We may enter into negotiations for acquisitions that are not ultimately consummated. Those negotiations could result in diversion of management time and significant out-of-pocket costs. If we fail to evaluate and execute acquisitions successfully, our business, results of operations, and financial condition could be materially adversely affected.
In addition, we may not be successful in integrating acquisitions, or the businesses we acquire may not perform as well as we expect. While our acquisitions to date have not caused major disruptions in our business, any future failure to manage and successfully integrate acquired businesses could materially adversely affect our business, results of operations, and financial condition. Acquisitions involve numerous risks, including the following:
- difficulties in integrating and managing the combined operations, technology platforms, or offerings of the acquired companies and realizing the anticipated economic, operational, and other benefits in a timely manner, which could result in substantial costs and delays, and failure to execute on the intended strategy and synergies;- failure of the acquired businesses to achieve anticipated revenue, earnings, or cash flow;- diversion of management's attention or other resources from our existing business;- our inability to maintain the key customers, business relationships, suppliers, and brand potential of acquired businesses;- uncertainty of entry into businesses or geographies in which we have limited or no prior experience or in which competitors have stronger positions;- unanticipated costs associated with pursuing acquisitions or greater than expected costs in integrating the acquired businesses;- responsibility for the liabilities of acquired businesses, including those that were not disclosed to us or exceed our estimates, such as liabilities arising out of the failure to maintain effective data protection and privacy controls, and liabilities arising out of the failure to comply with applicable laws and regulations, including tax laws;- difficulties in or costs associated with assigning or transferring to us or our subsidiaries the acquired companies' intellectual property or its licenses to third-party intellectual property;- inability to maintain our culture and values, ethical standards, controls, procedures, and policies;- challenges in integrating the workforce of acquired companies and the potential loss of key employees of the acquired companies;- challenges in integrating and auditing the financial statements of acquired companies that have not historically prepared financial statements in accordance with GAAP; and - potential accounting charges to the extent goodwill and intangible assets recorded in connection with an acquisition, such as trademarks, customer relationships, or intellectual property, are later determined to be impaired and written down in value.
From time to time, we also make investments in private companies, which are inherently risky. To the extent our investments in such companies have experienced a decline in value, we have recognized an expense to adjust the carrying value to its estimated fair value. Negative changes in the estimated fair value of private companies in which we invest could have a material adverse effect on our results of operations and financial condition.
Corporate Activity and Growth - Risk 3
We may not be able to sustain our revenue growth rate or effectively manage growth or new opportunities.Added
Our future revenue growth depends on the growth of supply and demand for listings on our platform and the development and adoption of new offerings and initiatives. Our business is also affected by general economic and business conditions worldwide as well as trends in the global travel and hospitality industries and the short and long-term accommodation regulatory landscape. A softening of supply or demand for our current or future offerings, whether caused by events outside of our control, challenging macroeconomic and political conditions, changes in host and guest preferences, public health crises such as pandemics, and any of the other factors described in these Risk Factors and elsewhere in this Annual Report on Form 10-K, or otherwise, may result in decreased revenue and our business, results of operations, and financial condition could be materially adversely affected.
Legal & Regulatory
Total Risks: 14/53 (26%)Above Sector Average
Regulation5 | 9.4%
Regulation - Risk 1
Avoiding regulation under the Investment Company Act may adversely affect our operations.Regulation - Risk 2
We are subject to payment network rules, and any material modification of our payment card acceptance privileges could have a material adverse effect on our business, results of operations, and financial condition.The loss of our credit and debit card acceptance privileges or the significant modification of the terms under which we obtain card acceptance privileges would significantly limit our business model since a vast majority of our guests pay using credit or debit cards. We must comply with payment card network rules, including the Payment Card Industry Data Security Standards (the "PCI DSS"), which requires robust internal controls over the use, storage, and transmission of card data to help prevent fraud. Compliance demands significant resources and ongoing attention, and any system failures could materially adversely affect our business, results of operations, and financial condition.
Non-compliance with PCI DSS or payment network rules could breach our contracts with payment processors, leading to fines, penalties, and potential loss of card processing capabilities. Payment networks may also change rules, causing operational disruptions and compliance challenges. Even with compliance, we cannot guarantee the maintenance of our card acceptance privileges or the prevention of data or security breaches, illegal or improper use of our payments platform, or the theft, loss, or misuse of card data or the maintenance of card acceptance privileges.
We are also subject to network operating rules and guidelines promulgated by the National Automated Clearing House Association ("NACHA") relating to payment transactions we process using the Automated Clearing House ("ACH") Network, which may change and result in costly compliance measures. Failure to comply with these standards could result in losing our payment card acceptance privileges, materially affecting our business, results of operations, and financial condition.
Regulation - Risk 3
We are subject to governmental economic and trade sanctions laws and regulations that limit the scope of our offerings. Additionally, failure to comply with applicable economic and trade sanctions laws and regulations could subject us to liability and negatively affect our business, results of operations, and financial condition.Changed
We must comply with economic and trade sanctions from governments where we operate, including U.S. agencies like the U.S. Treasury Department's Office of Foreign Assets Control ("OFAC"), the Council of the European Union, the Office of Financial Sanctions Implementation of His Majesty's Treasury in the United Kingdom ("OFSI"), and Luxembourg's Ministry of Finance. These sanctions restrict transactions or dealings with certain countries, regions, and governments, and certain individuals or entities, such as those operating,organized, or resident in certain countries or regions or those listed on OFAC's List of Specially Designated Nationals and Blocked Persons. Future sanctions in key business areas could materially impact our business, results of operations and financial condition.
To comply, we maintain and regularly update internal controls and report to OFAC, OFSI, and Luxembourg authorities on blocked or rejected payments and potential violations. Despite having these controls in place, there is a risk that we might inadvertently engage in transactions inconsistent with applicable sanctions laws. Any breaches or investigations could lead to claims or actions against us, affecting our business, results of operations, and financial condition. As we grow and as regulations evolve, we may need to invest further in our internal controls or adjust our operations.
Regulation - Risk 4
Our payments operations are subject to extensive, complex, overlapping and frequently changing government regulation and oversight and any failure or perceived failure to comply with such laws, rules, regulations, policies, legal interpretations, and regulatory guidance could materially adversely affect our business, results of operations, and financial condition.Changed
Our payments platform is subject to various laws, rules, regulations, policies, legal interpretations, and regulatory guidance, including those governing: cross-border and domestic money transmission and funds transfers; stored value and prepaid access; foreign exchange; data privacy, and data security; banking secrecy; payment services (including payment processing and settlement services); consumer protection; economic and trade sanctions; anti-corruption and anti-bribery; and anti-money laundering ("AML") and counter-terrorist financing ("CTF"). As we expand further, we face varying and sometimes conflicting legal obligations. For example, certain transactions that may be permissible in one jurisdiction may be prohibited by sanctions, AML, CTF, or other regulations in a different jurisdiction. We regularly assess our compliance programs and may identify gaps requiring costly enhancements to our policies and controls.
Non-compliance or perceived failure to comply with these existing or new laws and regulations, including changes to or expansion of their interpretations, can lead to significant fines, lawsuits, regulatory and/or governmental investigations, enforcement actions, loss of required licenses and other civil and criminal penalties, forcing us to alter operations or delay product launches, adversely affecting our brand, business, results of operations, financial condition and future prospects. The complexity of global regulations may trigger overlapping investigations by multiple authorities, impacting our relationships with financial institutions. Maintaining robust internal controls is essential to comply with these regulations, and failure to do so could result in reputational damage and substantial penalties.
Airbnb Ireland Unlimited Company ("AIUC") and Airbnb UK Services Limited ("AUKSL") each operate as an "appointed representative" and utilize the license of regulated third parties ("principal firms") to: (i) in the case of AIUC, act as a credit broker (presenting regulated third party consumer credit products to UK customers); and (ii) in the case of AUKSL, distribute guest travel insurance and host and experiences liability insurance. We are reliant on the principal firms to continue to permit us to use their licenses to offer or distribute these services/products and they can cancel our agreement, with notice, at any time, which could have an adverse impact on these revenue streams if we were unable to find suitable replacement principal firms. If we were found to have breached the terms of our agreement with the principal firms and/or breached regulatory requirements applicable to us, for example, by misrepresenting credit products to UK consumers, despite our not holding the licenses to perform these activities, we could nevertheless be liable to penalties imposed by the UK regulators. This could potentially also impact the UK licenses from the Financial Conduct Authority other of our group entities do currently hold (see Payments Regulation below).
Payments Regulation
In the United States, our wholly-owned subsidiary, Airbnb Payments, Inc. ("Airbnb Payments"), is regulated as a "Money Services Business" by the Financial Crimes Enforcement Network and requires state licenses to act as a money transmitter. Compliance involves handling customer funds, record-keeping, and reporting, with potential licensing needs in unlicensed states due to regulatory changes.
Airbnb Payments Luxembourg SA ("APLux") operates as a licensed payments institution across the EEA from Luxembourg, while Airbnb Payments UK Limited ("APUK") is licensed as an electronic money institution ("EMI") providing payment services from the United Kingdom. Compliance with EEA and UK regulations, such as the EU Digital Operational Resilience Act Regulation, the Luxembourg implementation of the EU Second Payment Services Directive ("PSD2") and the UK's Payment Services Regulations 2017 ("UK PSR"), involves complex and potentially onerous requirements, including operational and payment security and strong customer authentication, which may increase compliance costs, raise risk of non-compliance, and impact the ease of usage of the payment features of the platform.
Additionally, the proposed EU Third Payment Services Directive ("PSD3") and proposed regulation on the same ("EU PSR") will include amendments to strong customer authentication and anti-fraud obligations amongst other day-to-day requirements. The United Kingdom is also considering areas for reform for its payment services regime, including information requirements regarding currency conversion charges, and notice provisions for the termination of customer contracts. When these proposed measures are finalized and in-force, they may increase our compliance costs and require additional resources as well as changes to our processes and operations.
From time to time, we apply for licenses in new jurisdictions, which subject us to additional compliance requirements and regulatory scrutiny. In unclear regulatory environments, we partner with local banks and processors, but may face restrictions from local regulators or need additional licenses or approvals. Obtaining and maintaining compliance with global licensing and regulatory requirements incurs significant costs and operational changes, with potential fines or other enforcement actions for violations. These challenges could delay or restrict our services, affecting our business, results of operations, financial condition, and future prospects.
Consumer Protection
We are subject to consumer protection laws in the United States and other countries where we operate. In the United States, the Dodd-Frank Act established the Consumer Financial Protection Bureau ("CFPB"), which enforces federal consumer financial protection laws. We must comply with these laws, including the Electronic Fund Transfer Act and Regulation E, which require service disclosures, error resolution, and consumer reimbursement for unauthorized transactions. The CFPB may adopt other regulations governing consumer financial services, including regulations defining unfair, deceptive, or abusive acts, potentially increasing our compliance costs and litigation risks. Consumer protection laws could also be violated inadvertently, for example as a result of technical bugs.
Violations of consumer protection laws could lead to fines, penalties, and changes in business practices, incurring substantial costs. State attorneys general and other officials can enforce federal consumer protection laws, and various agencies can conduct investigations that may result in significant penalties.
In the United Kingdom and Luxembourg, payments-related consumer protection laws apply to APUK and APLux, and EU regulators may impose additional local requirements, including on our local banks and processors, potentially increasing costs or delaying business expansion in EU countries.
We also issue gift cards in the United States, United Kingdom, European Union and many other jurisdictions, which are subject to consumer protection laws, and may face additional regulations if we expand these services.
Additionally, our payment services are subject to U.S. data privacy laws, including the Gramm-Leach-Bliley Act of 1999 ("GLBA"), which governs the handling of personal information and imposes data security standards. Non-compliance could result in financial penalties. See our risk factor on data privacy and security compliance for more details.
Anti-Money Laundering and Counter-Terrorist Financing
We are subject to various AML and CTF laws and regulations around the world, including the BSA and the UK Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (as amended) (the "MLRs"). Among other things, the BSA and MLRs require money services businesses (including money transmitters like Airbnb Payments) to implement risk-based AML and CTF programs, report suspicious transactions or activities, and maintain transaction records. We must also comply with, among other requirements, the UK Proceeds of Crime Act 2002 and Terrorism Act 2000, which prohibit the handling of criminal proceeds. We provide information to government agencies to assist in the detection and prevention of illegal activities and may be required to deny certain transactions, risking inadvertent denials of legal transfers.
Regulators may demand enhancements to our compliance programs, including customer identity verification and transaction monitoring. In the United Kingdom and European Union, stricter AML regulations could increase compliance costs and operational challenges and/or require us not to provide services to certain clients, potentially reducing business. Non-compliance with local laws implementing EU directives could result in fines up to 10% of APLux's annual revenue, and similar penalties apply to APUK under the MLRs.
The EU has agreed and adopted a comprehensive package of measures to reform the primary AML, CTF legislation across all EU 27 Member States (the package together is known as "MLD6"). This means that APLux will need to undertake a detailed impact assessment to the required uplifts to existing policies and procedures. This will likely result in material changes to the day to day AML and CTF operating procedures of APLux and material divergence between the AML and CTF rules applicable to APUK in the UK and those applicable to APLux, bringing with it increased costs and the regulatory enforcement risks (such as fines, censures and potentially the suspension or removal of regulatory licenses or controls placed on APLux's ability to onboard new customers) associated with designing compliance with a nascent regime.
Regulation - Risk 5
We are subject to a wide variety of laws, regulations, and rules applicable to short-term rental, long-term rental, and home sharing businesses, or that govern our business practices, including among others, e-commerce, data privacy, payment services, advertising, consumer protection, employment, and commercial practices. Such laws and regulations are complex, evolving, and sometimes inconsistent and have limited and may continue to limit the ability or willingness of new or existing hosts to share their spaces through our platform. These regulations may expose our users or us to regulatory inquiries, litigation, and/or other disputes and to potentially significant liabilities, including taxes, compliance costs, fines, and criminal or other penalties, which have had and could continue to have a material effect on our business, results of operations, and financial condition.Changed
Hosts list, and guests search for, stays and experiences on our platform in more than 220 countries and regions across the globe. There are national, state, local, and foreign laws and regulations in jurisdictions that relate to or affect our business and, since we began our operations in 2008, there have been and continue to be legal and regulatory developments and inconsistent or ambiguous interpretations among local, regional, or national laws or regulations that affect the short-term rental, experiences, long-term rental, and home sharing business. These laws and regulations may impact the ability of hosts to list properties entirely and/or may limit the location and/or duration of stays permitted, or may establish other conditions upon which they are allowed to host. In addition, regulations may require that we, rather than local, state or national regulatory enforcement agencies, limit hosts' ability to list within those requirements.
Compliance Costs
Compliance with diverse and evolving laws across jurisdictions is costly and complex, increasing our operational expenses and potential liabilities (including potential criminal or other penalties). For example, we incur significant operational costs to comply with requirements of jurisdictions and cities that have disparate requirements around tax collection, tax reporting, data sharing, host registration, limits on lengths of stays, and other regulations, each of which may require us to dedicate significant resources to provide the infrastructure and tools needed on our platform for our hosts to meet these legal requirements and for us to fulfill any obligations we may have. Environmental, health, and safety requirements have also become increasingly stringent, and our costs, and our hosts' costs, to comply with such requirements may increase as a result. The complexity of our platform and changes required to comply with the large number of varying requirements can lead to constraints on supply as well as compliance gaps. Additionally, unclear and changing laws can deter hosts and guests from using our platform, reduce supply and demand, and increase litigation risks, adversely affecting our business. Failure or delays in complying with laws, even if unclear or in dispute, could subject us to penalties, including fines, business disruption and site blocking.
We require hosts and guests to comply with all applicable legal obligations under our terms of service, but governments may nonetheless seek to hold us accountable for hosts' and guests' compliance. This can lead to penalties and costs that impact our reputation and financial condition.
Our compliance measures, such as requiring hosts to include registration numbers for listings in some jurisdictions, may increase platform friction and reduce listings and bookings. Host listings may also be limited by night caps, density restrictions, onerous permitting requirements, primary residence or host presence requirements, permit caps, minimum night stays, and/or discretionary permitting or lottery systems. Additional regulations could necessitate significant platform changes, discouraging use and increasing scrutiny and liability.
We are subject to laws and regulations governing our business practices, the Internet, e-commerce, and electronic devices, including those relating to taxation, data privacy, data security, pricing, content, advertising, discrimination, consumer protection, protection of minors, insurance, copyrights, distribution, messaging, mobile communications, electronic device certification, electronic waste, electronic contracts, communications, Internet access, competition, AI, and unfair commercial practices as well as federal, state, local, and foreign laws regulating employment, employee working conditions, including wage and hour laws, employment dispute and employee bargaining processes, collective and representative actions, employment classification, and other employment compliance requirements. Violation of these laws could subject the company to fines and penalties, including in some cases, criminal penalties.
Regulatory Developments
Hotels and groups affiliated with hotels have engaged and will likely continue to engage in various lobbying and political efforts for stricter regulations governing our business in both local and national jurisdictions. Additionally, private groups, such as homeowners and neighborhood associations, may adopt contracts or regulations that purport to ban or otherwise restrict the ability of hosts to list their spaces. In some jurisdictions, regulations imposing restrictions on short-term rentals are increasingly fragmented at the local level, leading to increased compliance burden. These efforts, along with existing and potential new laws, could restrict short-term rentals, impose registration requirements and other limits to hosts' ability to list, and lead to significant fines and liabilities, materially affecting our platform's operations and financial condition. For instance, EU Member State laws pertaining to the recently enacted EU STR Regulation will require additional compliance efforts, potentially discouraging and prohibiting current and potential hosts from listing properties. As another example, the City of New York has effectively banned short-term rentals, and this has led to similar restrictions being considered throughout the State of New York. If other geographies emulate these regulations, it could have a material adverse effect on our business and financial condition.
We face ongoing disputes with government agencies over regulations, which may result in fines and operational changes. Some jurisdictions have imposed or may seek to impose taxes and licensing requirements on our platform and failure to comply could lead to penalties. We have resolved some disputes by agreeing to remove listings or share data with authorities. From time to time, we attempt to defend against application of laws and regulations that limit hosts' or guests' ability or willingness to list and search for accommodations, but have sometimes been and may continue to be unsuccessful in certain of those efforts.
Increased regulatory interest in technology companies, particularly regarding AI, data privacy, competition, and sustainability, could lead to further compliance challenges. New or changing laws could impose significant costs and liabilities, affecting our business operations and financial condition. Our attempts to influence legislation face uncertainty and may divert resources from core operations.
Regulatory Inquiries, Litigation & Disputes
We are frequently involved in legal and regulatory claims, including government inquiries and litigation related to short-term rentals, taxes, consumer protection, payment services, insurance, and data privacy. These proceedings are complex, costly, and time-consuming, requiring significant resources and potentially leading to fines, penalties, and operational changes. As our business grows, the number and complexity of these claims are expected to increase, potentially impacting our brand and financial condition.
We face litigation, inquiries, investigations, audits, and proceedings with governments and other entities over regulations affecting short-term rentals and platform liability. Changes in legal interpretations could further impact our operations. Additionally, we are subject to claims related to incidents at listings, such as personal injuries, cancellations and refunds, and privacy violations, as well as class action lawsuits and government inquiries. If we become more involved in hosts' listings and conduct related to bookings, then we are more likely to draw scrutiny and additional regulations from governments and undercut various defenses we may have to claims or attempts to regulate us, which further constrain our business and impose additional liability on us as a platform.
We may also become more vulnerable to third-party claims as U.S. laws such as the Digital Millennium Copyright Act ("DMCA"), the Stored Communications Act, and the Communications Decency Act ("CDA"), and non-U.S. laws such as the Digital Services Act ("DSA"), the EU STR Regulation, and the European E-Commerce Directive and their national transpositions are interpreted by the courts or if they are otherwise modified or amended, as our platform and services to our hosts and guests continue to expand, and as we expand geographically into jurisdictions where the underlying laws with respect to the potential liability of online intermediaries such as ourselves are either unclear or less favorable.
We also face intellectual property disputes and indemnification obligations, which could lead to further litigation. In addition, compliance with escheatment laws and audits could result in additional liabilities and impact our financial results.
Adverse outcomes in legal proceedings may result in significant financial penalties, changes to business practices, increased costs and reputational damage. Litigation diverts resources and may not be fully covered by our existing insurance policies, which may not be available to us on financially reasonable terms in the future or at all. Additionally, if we enter an agreement with a government or governmental agency to resolve a dispute, the terms of such agreement may be publicly available and could create a precedent that may lead to similar disputes in other jurisdictions and may put us in a weaker bargaining position in future disputes with other governments. As we expand, we anticipate continued legal challenges that could materially adversely affect our business, results of operations, and financial condition.
Litigation & Legal Liabilities4 | 7.5%
Litigation & Legal Liabilities - Risk 1
Host, guest, or third-party actions that are criminal, violent, inappropriate, dangerous, or fraudulent, may undermine the safety or the perception of safety on our platform and our ability to attract and retain hosts and guests and materially adversely affect our reputation, business, results of operations, and financial condition.Changed
Litigation & Legal Liabilities - Risk 2
We could face liability for information or content on or accessible through our platform.We could face claims relating to information or content that is made available on our platform. Our platform relies upon content that is created and posted by hosts, guests, or other third parties. Although content on our platform is typically generated by third parties, and not by us, claims of defamation, disparagement, negligence, warranty, personal harm, intellectual property infringement, or other alleged damages could be asserted against us, in addition to our hosts and guests. While we rely on legal exemptions and protections like the DMCA and CDA in the United States and the E-Commerce Directive in the European Union, varying laws and interpretations regarding immunity and responsibility across jurisdictions may limit these exemptions or defenses or create uncertainty regarding liability for information or content uploaded by hosts, guests, or other third parties. To the extent that Airbnb creates or is deemed to create or facilitate such content on the platform, these defenses may be less available. New regulations could increase our liability and compliance costs, impacting our business.
In the United States, changes to the CDA could reduce protections for online platforms. In the EU, the DSA and Digital Markets Act ("DMA") introduced new compliance requirements and potential fines. Other regions, like Asia and Latin America, have or are developing regulations that could impose direct or secondary liability on platforms for harmful content. These laws may require us to implement costly measures to mitigate liability, affecting our platform's appeal and our brand reputation.
The EU's Consumer Rights Directive and the Unfair Commercial Practices Directive impose strict consumer protection requirements, with potential fines for non-compliance. Consumers and certain Consumer Protection Associations may bring individual claims against us, and the Collective Redress Directive allows for class actions across the EU, increasing our litigation risk. Compliance with these evolving regulations may increase operational costs and materially adversely affect our business, results of operations, and financial condition.
Litigation & Legal Liabilities - Risk 3
We have operations in countries known to experience high levels of corruption, and any violation of anti-corruption laws could subject us to penalties and other adverse consequences.We are subject to anti-corruption laws and regulations including the U.S. Foreign Corrupt Practices Act ("FCPA") and other laws in the United States and elsewhere (including the UK Bribery Act 2010) that prohibit improper payments or offers of payments to foreign governments and their officials, political parties, state-owned or controlled enterprises, and/or private entities and individuals for the purpose of obtaining or retaining business. We have operations in and deal with countries known to experience corruption. Our activities in these countries create the risk of unauthorized payments or offers of payments by one of our employees, contractors, agents, or users that could be in violation of various laws, including the FCPA and anti-corruption and anti-bribery laws in these countries. We have implemented policies, procedures, systems, and controls designed to ensure compliance with applicable laws and to discourage corrupt practices by our employees, consultants, and agents, and to identify and address potentially impermissible transactions under such laws and regulations; however, our existing and future safeguards, including training and compliance programs to discourage corrupt practices by such parties, may not prove effective, and we cannot ensure that all such parties, including those that may be based in or from countries where practices that violate U.S. or other laws may be customary, will not take actions in violation of our policies, for which we may be ultimately responsible. Additional compliance requirements may require us to revise or expand our compliance programs, including the procedures we use to monitor international and domestic transactions. Failure to comply with any of these laws and regulations may result in extensive internal or external investigations as well as significant financial penalties and reputational harm, which could materially adversely affect our business, results of operations, and financial condition.
Technology, Data and Cybersecurity Risks
Technology, Data Security and Cybersecurity
Litigation & Legal Liabilities - Risk 4
Claims for indemnification by our directors and officers may reduce our available funds to satisfy successful third-party claims against us and may reduce the amount of money available to us.Our restated certificate of incorporation and amended and restated bylaws provide that we will indemnify our directors and officers who are, or are threatened to be, made a party to or otherwise involved in an action, suit or proceeding by reason of the fact of their service to the Company, in each case to the fullest extent permitted by Delaware law.
In addition, as permitted by Section 145 of the Delaware General Corporation Law, our amended and restated bylaws and/or our indemnification agreements that we have entered or intend to enter into with our directors and officers and certain other employees provide that:
- we will indemnify our directors and officers to the fullest extent permitted by Delaware law. Delaware law provides that a corporation may indemnify such person if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the registrant and, with respect to any criminal proceeding, had no reasonable cause to believe such person's conduct was unlawful;- under certain circumstances we are required to advance expenses, as incurred, to our directors and officers in connection with defending a proceeding in advance of its final disposition, except that our obligation to provide advancement to such directors or officers is contingent upon their agreement to repay such advances if it is ultimately determined that such person is not entitled to indemnification;- we may, in our discretion, (i) indemnify employees and agents in those circumstances where indemnification is permitted by applicable law, and (ii) advance expenses, as incurred, to our employees and agents in connection with defending a proceeding in advance of its final disposition, contingent on such employees' or agents' agreement to repay such advances if it is ultimately determined that such person is not entitled to indemnification;- we are bound by any existing indemnification agreements for employees or agents;- the rights conferred in our amended and restated bylaws are not exclusive, and we are authorized to enter into indemnification agreements with our directors, officers, employees, and agents and to obtain insurance to indemnify such persons; and - we may not retroactively amend or repeal our amended and restated bylaws to reduce our indemnification or advancement obligations relating to any act or omission occurring prior to the time of such amendment or repeal.
While we have procured directors' and officers' liability insurance policies, such insurance policies may not be available to us in the future at a reasonable rate, may not cover all potential claims for indemnification, and may not be adequate to indemnify us for all liability that may be imposed.
Taxation & Government Incentives3 | 5.7%
Taxation & Government Incentives - Risk 1
Changes in tax laws or tax rulings could materially adversely affect our business, results of operations and financial condition.Changed
Taxation & Government Incentives - Risk 2
Uncertainty in the application of taxes to our hosts, guests, or platform could increase our tax liabilities and may discourage hosts and guests from conducting business on our platform.We face complex and evolving tax obligations across various jurisdictions, which could significantly impact our business. We are subject to numerous taxes, including income and indirect taxes, and have received demands from governments for data to enforce tax laws against our hosts and guests. We collect and remit taxes on behalf of hosts when legally required, but disputes and lawsuits over tax responsibilities persist. New or revised tax laws could increase our tax liabilities and operational costs, potentially leading to penalties for non-compliance.
The application of indirect taxes, such as lodging taxes, transactional taxes, hotel, sales and use tax, privilege taxes, excise taxes, VAT, goods and services tax, digital services taxes, harmonized sales taxes, business tax, and gross receipt taxes (together, "indirect taxes") to e-commerce activities such as ours and to our hosts or guests is a complex and evolving issue. These taxes could raise costs for hosts and guests, discourage platform use, and reduce revenue. For example, we recorded approximately $53 million in expense related to digital service taxes relating to prior periods as a result of refining our interpretation of the law as it applies to us. Additionally, we recorded $18 million of lodging tax expense in a particular jurisdiction over uncertainty as to how a new law applies to us. Compliance with tax reporting may require disclosing personal data, risking privacy concerns and regulatory actions. Competitors may adopt different tax strategies, potentially attracting our hosts and guests.
We devote significant resources, including management time, to the application and interpretation of laws and working with various jurisdictions to clarify whether taxes are applicable and the amount of taxes that apply. Rapid regulatory changes and lack of uniformity complicate compliance, risking errors and enforcement actions. As our business evolves, tax obligations may increase, further affecting our financial condition and platform usage.
Taxation & Government Incentives - Risk 3
We may have exposure to greater than anticipated income tax liabilities.Our income tax obligations are based in part on our corporate operating structure and intercompany arrangements, including the manner in which we operate our business, develop, value, manage, protect, and use our intellectual property, and determine the value of our intercompany transactions. The tax laws applicable to our business, including those of the United States and other jurisdictions, are subject to interpretation, and certain jurisdictions are aggressively interpreting their laws in new ways in an effort to raise additional tax revenue from companies such as Airbnb. The taxing authorities of the jurisdictions in which we operate may challenge our methodologies for valuing developed technology or intercompany arrangements, which could increase our worldwide effective tax rate and materially adversely affect our results of operations and financial condition.
We are subject to regular review and audit by U.S. federal, state, local, and foreign tax authorities. For example, our 2008 to 2024 tax years remain subject to examination in the United States and California due to tax attributes and statutes of limitations, and our 2020 to 2024 tax years remain subject to examination in Ireland. We are currently under examination for income taxes by the Internal Revenue Service ("IRS") for the years 2013, 2016, 2017 and 2018. We are continuing to respond to inquiries related to these examinations. In December 2020, we received a Notice of Proposed Adjustment ("NOPA") from the IRS for the 2013 tax year relating to the valuation of our international intellectual property which was sold to a subsidiary in 2013. The notice proposed an increase to our U.S. taxable income that could result in additional income tax expense and cash tax liability of $1.3 billion, plus penalties and interest, which exceeds our current reserve recorded in our consolidated financial statements by more than $1.0 billion. We disagree with the proposed adjustment and intend to vigorously contest it. In January 2022, we entered into an administrative dispute process with the IRS Independent Office of Appeals ("IRS Appeals") regarding the proposed adjustment. An acceptable outcome was not reached with IRS Appeals, and in May 2024, we received a Statutory Notice of Deficiency ("Notice") from the IRS related to the aforementioned valuation of our international intellectual property. The Notice claims that we owe $1.3 billion in tax, plus penalties and interest. We will continue to pursue all available remedies to resolve this dispute. In July 2024, we petitioned the U.S. Tax Court ("Tax Court") for redetermination, and if necessary, we will appeal the Tax Court's decision to the appropriate appellate court. If the IRS prevails in the assessment of additional tax due based on its position and such tax and related interest and penalties, if any, exceeds our current reserves, such outcome could have a material adverse impact on our financial position and results of operations, and any assessment of additional tax could require a significant cash payment and have a material adverse impact on our cash flow.
Environmental / Social2 | 3.8%
Environmental / Social - Risk 1
Compliance with federal, state, and foreign laws relating to data privacy, data security, artificial intelligence, marketing and consumer protection involves significant expenditure and resources, and any actual or perceived failure by us or our vendors to comply may result in significant liability, litigation or other legal action against us, negative publicity, an erosion of trust, and/or result in regulatory scrutiny, fines and penalties and could materially adversely affect our business, results of operations, and financial condition.Changed
Environmental / Social - Risk 2
Evolving focus on environmental, social, and governance issues by shareholders, customers, regulators, politicians, employees, and other stakeholders may impose additional risks and costs on our business.Changed
ESG matters are an area of growing and evolving focus among our shareholders and other stakeholders, including customers, employees, regulators, politicians, and the general public in the United States and abroad. Companies like Airbnb face heightened expectations regarding matters such as environmental sustainability, diversity, human rights, and data privacy. We engage in various initiatives to serve our stakeholders in these and other areas, and to respond to stakeholder expectations regarding ESG, but such initiatives can be costly and may not have the desired effect. For example, many ESG initiatives (including related metrics and targets) are based on methodologies, standards, and data that are still evolving or are subject to variable interpretation; as with other companies, our approach to such matters evolves, and we cannot guarantee that our approach, either now or in future, will align with the expectations or preferences of any particular stakeholder or that certain disclosures will not be considered erroneous or subject to misinterpretation.
Moreover, stakeholders have varying and sometimes conflicting perceptions of ESG matters. Both advocates and opponents of various issues are increasingly resorting to activism (including media campaigns and litigation) to advocate for their positions. Responding to such issues involves inherent costs, and any failure to successfully navigate stakeholder expectations could negatively impact our business, results of operations, financial condition, and stock price.
The regulatory landscape for ESG issues is also rapidly evolving, and various policymakers, including the European Union and State of California, among others, have adopted (or are considering adopting) requirements for climate- or other ESG-related disclosures or other actions. We may face risks related to sustainability reporting obligations under the evolving regulatory landscape in the European Union. Specifically, the Corporate Sustainability Reporting Directive ("CSRD") and the Corporate Sustainability Due Diligence Directive ("CSDDD") impose stringent requirements on companies to disclose detailed information regarding their ESG practices. Furthermore, the transposition of the CSRD by EU member states will also impact the scope of these requirements. Many member states have not yet transposed the directive, adding another layer of uncertainty to compliance efforts. Additionally, the EU's Omnibus Simplification Package introduces further complexity and uncertainty in the European Union. Compliance involves significant expenses and resources, with risks of errors in implementing necessary changes. These requirements are not uniform, and may not be interpreted or applied uniformly, which may increase the cost and complexity of compliance, as well as any related risks. Various of our suppliers and other stakeholders are subject to similar risks, which may exacerbate, or create additional, risks on such matters.
Tech & Innovation
Total Risks: 6/53 (11%)Below Sector Average
Innovation / R&D1 | 1.9%
Innovation / R&D - Risk 1
Measures that we are taking to improve the trust and safety of our platform may cause us to incur significant expenditures and may not be successful.Trade Secrets2 | 3.8%
Trade Secrets - Risk 1
We have been, and may in the future be, subject to claims that we or others violated certain third-party intellectual property rights, which, even where meritless, can be costly to defend and could materially adversely affect our business, results of operations, and financial condition.Trade Secrets - Risk 2
If we do not adequately protect our intellectual property and our data, then our business, results of operations, and financial condition could be materially adversely affected.Changed
We hold a broad collection of intellectual property rights, including those related to our brand; certain content and design elements on our platform; our code and our data; inventions and processes related to our platform, services, and research and development efforts; an extensive repository of wholly-owned audio and visual assets; marketing and promotional concepts and materials; a collection of editorial content; and certain entertainment-related assets. This includes registered domain names, registered and unregistered trademarks, service marks, and copyrights, patents, and patent applications, trade secret rights, licenses of intellectual property rights of various kinds, and other forms of intellectual property rights in the United States and in a number of countries around the world. To further protect our proprietary rights, from time to time we have acquired or licensed patents, trademarks, domain name registrations, and copyrights from third parties. Despite these protections, the use or misappropriation of our intellectual property rights by third parties can diminish the value of our brand and allow competitors to replicate our offerings.
Our intellectual property assets and rights are essential to our business, and in the future, we may acquire or license additional patents or patent portfolios, or other intellectual property assets and rights from third parties, which could require significant cash expenditures. If the protection of our proprietary rights and data is inadequate to prevent unauthorized use or misappropriation by third parties, the value of our brand and other intangible assets may be diminished and competitors may be able to mimic our technologies, offerings, or features or methods of operations more effectively. If we fail to protect our intellectual property and data in a cost-effective and meaningful manner, our competitive standing could be harmed; our hosts, guests, other consumers, and corporate and community partners could devalue the content of our platform; and our brand, reputation, business, results of operations, and financial condition could be materially adversely affected.
Technology3 | 5.7%
Technology - Risk 1
IT System capacity constraints, system or other operational failures could materially adversely affect our business, results of operations, and financial condition.Changed
Technology - Risk 2
Our use of artificial intelligence and machine learning gives rise to legal, business, and operational risks, which may result in diminished performance, regulatory scrutiny, social impacts, reputational harm, and liability arising from the use of this technology.Changed
We currently use AI and ML Technologies in our offerings, for example with respect to fraud detection, search, enabling customized features and enhancing community support.
The rapid evolution of AI and ML Technologies will continue to require the application of significant resources to adopt, develop, test, integrate, and maintain AI and ML Technologies included in our offerings in order to remain competitive and to help implement these technologies responsibly and minimize unintended or harmful impacts. There are significant risks involved in adopting, developing, maintaining, and deploying these technologies, and there can be no assurance that the usage of such technologies will enhance our products or services or be beneficial to our business, including our efficiency or profitability. In particular, AI and ML Technologies may be incorrectly designed or implemented; may be trained or reliant on incomplete, inadequate, inaccurate, biased, or otherwise poor quality data or on data to which we or third parties do not have sufficient rights; and/or may be adversely impacted by unforeseen defects, technical challenges, cybersecurity threats, third-party litigation or regulatory action, or material performance issues. Any of the above could negatively impact the performance of our products, services and business, as well as our reputation, and we could incur liability and costs resulting from the actual or perceived violation of laws or contracts to which we are a party or civil claims.
In addition, AI and ML Technologies, including generative AI, may be vulnerable to adversarial user behavior or create inaccurate or misleading content or other discriminatory or unexpected results or behaviors, such as hallucinatory behavior that can generate irrelevant, unintended, nonsensical, or factually incorrect results. Our hosts, guests or others may rely on or use this flawed content or information to their detriment, which may expose us to brand or reputational harm, competitive harm, consumer complaints, legal liability, and other adverse consequences, any of which could materially adversely affect our business, results of operations, and financial condition. The use of AI and ML Technologies presents emerging ethical and social issues, and if we enable or offer solutions that draw scrutiny or controversy due to their perceived or actual impact on our customers or on society as a whole, we may experience brand or reputational harm, competitive harm, consumer complaints, legal liability, and other adverse consequences, any of which could materially adversely affect our business, results of operations, and financial condition.
Development, maintenance and operation of AI and ML Technologies requires additional investment in the development of proprietary datasets, machine learning models, and systems to monitor and test for accuracy, bias, and other variables, which are complex, costly, and could impact our profit margin as we expand the use of AI and ML Technologies in our offerings. Developing, testing, and deploying AI and ML Technologies also increase associated computing costs.
In addition to our proprietary technologies, we use AI and ML Technologies licensed from third parties. Our ability to continue to adopt, integrate and use such technologies at the scale we may need may be dependent on access to specific third-party software and infrastructure, such as processing hardware or third-party AI models, and we cannot control the quality, availability or pricing of such third-party software and infrastructure, especially in a highly competitive environment. If any such third-party AI and ML Technologies become incompatible with our offerings or unavailable for use or have degradations in performance, or if the providers of such models unfavorably change the terms on which their AI and ML Technologies are offered or terminate their relationship with us, our solutions may become less appealing to our customers. In addition, to the extent any third-party AI and ML Technologies are used as a vendor hosted service, any disruption, outage, or loss of information through such hosted services could disrupt our operations or solutions, damage our reputation, cause a loss of confidence in our solutions, or result in legal claims or proceedings, for which we may be unable to recover damages from the affected provider.
We face competition from other companies in our industry with respect to the development and deployment of AI and ML Technologies to enhance our competitive offerings. Those other companies may develop AI and ML Technologies that are similar or superior to ours and/or are more cost-effective and/or quicker to develop, deploy and maintain. Any inability to develop, offer or deploy new AI and ML Technologies as effectively, quickly and/or as cost-efficiently as our competitors could have a materially adverse impact on our operating results, customer relationships and growth.
The regulatory and intellectual property frameworks governing the use and protection of AI and ML Technologies and of its outputs are rapidly evolving, and we cannot predict how future legislation and regulation will impact our ability to offer and protect products or services that we develop which leverage AI and ML Technologies. Many federal, state and foreign government bodies and agencies have introduced or proposed additional laws and regulations. Additionally, existing laws and regulations may be interpreted in ways that would affect the operation of and availability of IP protection for our AI and ML Technologies. As a result, implementation standards, enforcement practices, and available scope of protection are likely to remain uncertain for the foreseeable future, and we cannot yet determine the impact future laws, regulations, or standards may have on our business (including our positioning with respect to our competition) and may not always be able to anticipate how to respond to these laws or regulations. Already, certain existing legal regimes (e.g., relating to data privacy) regulate certain aspects of AI and ML Technologies, and new laws regulating AI and ML Technologies are expected to continue to be proposed and enacted in the United States and globally. For further information related to AI laws and regulations that may affect our business, see the risk factor titled "Compliance with federal, state, and foreign laws relating to data privacy, data security, artificial intelligence, marketing and consumer protection involves significant expenditure and resources, and any actual or perceived failure by us or our vendors to comply may result in significant liability, litigation or other legal action against us, negative publicity, an erosion of trust, and/or result in regulatory scrutiny, fines and penalties and could materially adversely affect our business, results of operations, and financial condition."
It is also possible that new laws and regulations will be adopted in the United States and in other non-U.S. jurisdictions, or that existing laws and regulations, including data privacy, consumer protection, competition laws, may be interpreted in ways that would limit our ability to use AI and ML Technologies for our business, or require us to change the way we use AI and ML Technologies in a manner that negatively affects the performance of our products, services, and business and requires us to expend resources and adjust our products or services in certain jurisdictions. Further, the cost to comply with such laws, regulations, or decisions and/or guidance interpreting existing laws, could be significant and would increase our operating expenses (such as by imposing additional reporting obligations regarding our use of AI and ML Technologies). Such an increase in operating expenses, as well as any actual or perceived failure to comply with such laws and regulations, could adversely affect our business, financial condition and results of operations.
Platform Performance and Integrity
Technology - Risk 3
Our use of third-party open-source software and our open-source contributions could adversely affect our ability to offer or protect our platform and services and subject us to costly litigation and other disputes.From time to time, we incorporate certain open-source software into our code base as we continue to develop our platform and services. Open source software is licensed by its authors or owners under open source licenses, which in some instances may subject us to certain unfavorable conditions, including requirements that we offer our products that incorporate the open source software for no cost, that we make publicly available the source code for any modifications or derivative works we create based upon, incorporating, or using the open source software, or that we license such modifications or derivative works under the terms of the particular open source license. In addition, the use of third-party open-source software could expose us to greater risks than the use of third-party commercial software to the extent open-source licensors do not provide warranties or controls on the functionality or origin of the software equivalent to those provided by third-party commercial software providers. We also license to others some of our software through open-source projects. Open sourcing our own software requires us to make the source code publicly available, and therefore can limit our ability to protect our intellectual property rights with respect to that software. From time to time, companies that use open-source software have faced claims challenging the use of open-source software or compliance with open-source license terms. Furthermore, there is an increasing number of open-source software license types, almost none of which have been tested in a court of law, resulting in a dearth of guidance regarding the proper legal interpretation of such licenses. We could be subject to suits by parties claiming ownership of what we believe to be open-source software or claiming noncompliance with open-source licensing terms.
Inadvertent use of open-source software can occur in software development in the Internet and technology industries. Such inadvertent use of open source software could expose us to claims of non-compliance with the applicable terms of the underlying licenses, which could lead to unforeseen business disruptions, including being restricted from offering parts of our platform which incorporate the software, being required to publicly release proprietary source code, being required to re-engineer parts of our code base to comply with license terms, or being required to extract the open source software at issue. Our exposure to these risks may be increased as a result of evolving our core source code base, introducing new offerings, integrating acquired-company technologies, or making other business changes, including in areas where we do not currently compete. Any of the foregoing could adversely impact the value or enforceability of our intellectual property, and materially adversely affect our business, results of operations, and financial condition.
Production
Total Risks: 6/53 (11%)Below Sector Average
Employment / Personnel2 | 3.8%
Employment / Personnel - Risk 1
We have adopted a Live and Work Anywhere policy. The increase in remote working subjects us to certain operational challenges and could have adverse tax implications, which could materially adversely affect our business, results of operations, and financial condition.Changed
Employment / Personnel - Risk 2
Our business depends on attracting and retaining capable management and employees, and the loss of any key personnel could materially adversely affect our business, results of operations, and financial condition.Our success depends in large part on our ability to attract and retain high-quality management and employees. Our founders and other members of our senior management team, as well as other employees, may terminate their employment with us at any time, which could materially adversely affect our business, results of operations, and financial condition.
As we continue to grow, we cannot guarantee that we will be able to attract and retain the personnel we need. The loss of qualified employees, or an inability to attract, retain, and motivate employees required for the planned expansion of our business, would materially adversely affect our business, results of operations, and financial condition and impair our ability to grow. To attract and retain key personnel, we use various measures, including an equity incentive program, and our ability to attract, retain, and motivate employees may be adversely affected by declines in our stock price. Additionally, if we issue significant equity to attract employees or to retain our existing employees, we would incur substantial additional stock-based compensation expense and the ownership of our existing stockholders would be further diluted.
Supply Chain3 | 5.7%
Supply Chain - Risk 1
We rely on third-party payment service providers to process payments made by guests and payments made to hosts on our platform. If these third-party payment service providers become unavailable or if we are subject to increased fees, our business, results of operations, and financial condition could be materially adversely affected.Changed
Supply Chain - Risk 2
We currently rely on a number of third-party service providers to host and deliver a significant portion of our platform and services, and any interruptions or delays in services from these third parties, such as those resulting from cybersecurity incidents, could impair the delivery of our platform and services, and our business, results of operations, and financial condition could be materially adversely affected.We rely primarily on Amazon Web Services in the United States and abroad to host and deliver our platform. Third parties also provide services to key aspects of our operations, including Internet connections and networking, messaging, data storage and processing, trust and safety, security infrastructure, source code management, and testing and deployment. In addition, we rely on third parties for many aspects of our payments platform, and the vast majority of our community support operations is performed by a limited number of third-party service providers. We also rely on Google Maps and other third-party services for maps and location data that are core to the functionality of our platform, and we integrate applications, content, and data from third parties to deliver our platform and services.
We do not control the operation, physical security, or data security of any of these third-party providers. Despite our efforts to use commercially reasonable diligence in the selection and retention of such third-party providers, such efforts may be insufficient or inadequate to prevent or remediate such risks. Some of our third-party providers, including our cloud computing providers and our payment processing partners, have been and may be subject to further intrusions, computer viruses, malicious software (such as ransomware), denial-of-service attacks, phishing attacks, sabotage, acts of vandalism, terrorism, or other misconduct, and incidents due to inadvertent error or malfeasance by employees, contractors or other parties. There can be no assurance that our service providers will anticipate or prevent all types of attacks or that any security measures will be effective against all types of cybersecurity threats and risks. Our service providers are vulnerable to damage or interruption from power loss, telecommunications failures, fires, floods, earthquakes, hurricanes, tornadoes, and similar events, and they may be subject to financial, legal, regulatory, and labor issues, each of which may impose additional costs or requirements on us or prevent these third parties from providing services to us or our customers on our behalf. In addition, these third parties may breach their agreements with us, disagree with our interpretation of contract terms or applicable laws and regulations, refuse to continue or renew these agreements on commercially reasonable terms or at all, fail to or refuse to process transactions or provide other services adequately, take actions that degrade the functionality of our platform and services, increase prices, impose additional costs or requirements on us or our customers, or give preferential treatment to our competitors. If we are unable to procure alternatives in a timely and efficient manner and on acceptable terms, or at all, we may be subject to business disruptions, losses, or costs to remediate any of these deficiencies and reputational harm. Our systems currently do not provide complete redundancy of data storage or processing or payment processing, and business continuity and disaster recovery plans may not be effective. The occurrence of any of the above events could result in hosts and guests ceasing to use our platform, reputational damage, legal or regulatory proceedings, or other adverse consequences, which could materially adversely affect our business, results of operations, and financial condition.
Supply Chain - Risk 3
If we or our third-party providers fail to protect confidential information and/or experience security incidents, there may be damage to our brand and reputation, material financial penalties, and legal liability, along with a decline in use of our platform, which would materially adversely affect our business, results of operations, and financial condition.We own and manage some IT Systems but also rely on third parties for a range of IT Systems and related products and services, including, among others, cloud computing services and other third parties for the provision of our community support operations. We face evolving cybersecurity risks that threaten the confidentiality, integrity, and availability of our and our third-party providers' IT Systems and confidential information, including personal data and proprietary information. As we expand our technology use and collaborate with third parties, managing these threats becomes more challenging. These risks come from diverse threat actors, such as state-sponsored organizations, opportunistic hackers and hacktivists, as well as through diverse attack vectors, such as social engineering/phishing, malware (including ransomware), malfeasance by company insiders, suppliers or providers, and human or technological error, and as a result of malicious code embedded in open-source software, or misconfigurations, bugs, or other vulnerabilities in software and hardware that is integrated into our or our providers' IT Systems, products or services. We have, from time to time, found defects or errors in our IT Systems that have resulted in, and may discover additional issues in the future that could result in, platform unavailability or system disruption, or the inability of our systems to implement timely updates that are required for regulatory compliance. Additionally, any integration of AI or machine learning in our or any providers' operations, products or services poses new or unknown cybersecurity risks and challenges. Acquisitions of companies with vulnerable IT Systems further expose us to cybersecurity risks.
We encrypt certain data in transit and at rest, but advances in hacking and AI and machine learning may challenge our defenses. We and certain of our third-party service providers have experienced cyberattacks and other security incidents in the past, including distributed denial-of-service type attacks on our IT Systems that have made portions of our platform slow or unavailable for periods of time. Cyberattacks are expected to accelerate on a global basis in both frequency and magnitude as threat actors are becoming increasingly sophisticated in using techniques-including AI-that circumvent controls, evade detection, and remove forensic evidence, which means that we and our third-party providers may be unable to detect, investigate, contain or recover from future attacks or incidents in a timely or effective manner. Despite significant investments in security, we cannot fully mitigate these risks, and such security incidents could disrupt operations and lead to negative publicity, reputational damage, loss of users, increased support costs, regulatory fines, legal claims (including class actions), and significant financial losses, especially under laws which impose statutory damages per breached record, all of which could materially impact our business, results of operations, and financial condition.
Costs1 | 1.9%
Costs - Risk 1
The insurance coverage afforded by or available from our insurers may be inadequate for the needs of our business, and losses under our damage protection program could materially adversely affect our business, results of operations, and financial condition.Changed
Ability to Sell
Total Risks: 5/53 (9%)Below Sector Average
Competition1 | 1.9%
Competition - Risk 1
The business and industry in which we participate are highly competitive, and we may be unable to compete successfully with our current or future competitors.Sales & Marketing3 | 5.7%
Sales & Marketing - Risk 1
If we fail to retain or add hosts and guests, if hosts fail to provide high-quality stays and experiences, if our new offerings and initiatives are unsuccessful, or if our community support offerings are inadequate, our business, results of operations, and financial condition would be materially adversely affected.Changed
Sales & Marketing - Risk 2
We are subject to payment-related fraud, and an increase in or failure to deal effectively with fraud, fraudulent activities, fictitious transactions, or illegal transactions would materially adversely affect our business, results of operations, and financial condition.We process a significant volume and dollar value of transactions on a daily basis. When hosts do not fulfill their obligations to guests, there are fictitious listings or fraudulent bookings on our platform, or there are host account takeovers, we have incurred and will continue to incur losses from claims by hosts and guests, and these losses may be substantial. Such instances have and can lead to the reversal of payments received by us for such bookings, referred to as a "chargeback." For the year ended December 31, 2024, total chargeback expense was $96 million. The capabilities of criminal fraudsters and the susceptibility of individuals to fraud pose ongoing risks. Despite measures to detect and reduce fraud, these efforts require continuous improvement to address evolving threats, especially with new payment methods and technology platforms.
Our payments platform is vulnerable to illegal uses, such as money laundering and fraudulent listings, which can lead to legal claims, regulatory investigations, and reputational harm. While we strive to combat these activities, our measures may not always be effective, and failure to reduce fraud could result in fines, higher fees, or loss of payment card network access, which could materially adversely affect our business, results of operations and financial condition.
Sales & Marketing - Risk 3
We offer travel insurance products to guests, which subject us and our business to extensive laws, regulations, and supervision.Since June 2022, guests in certain jurisdictions have had the opportunity to purchase travel insurance when they make a booking. Over time, we expect to make travel insurance available to guests in additional countries. In the United States, travel insurance products are subject to extensive regulation in the states in which we transact business by state insurance departments. This regulation is generally designed to protect the interests of consumers. States have also adopted legislation defining and prohibiting unfair methods of competition and unfair or deceptive acts and practices in the business of insurance that may apply to insurance agencies. Noncompliance with any of such state statutes may subject us to regulatory action by the relevant state insurance regulator, and, in certain states, private litigation. In addition, we cannot predict the impact that any new laws, rules, or regulations, or unfavorable changes in or interpretations of existing laws, rules or regulations, may have on our business and financial results. States also regulate various aspects of the contractual relationships between insurers and independent agents. State insurance regulators may also conduct periodic examinations, the results of which could give rise to regulatory orders requiring remedial, injunctive, or other corrective action. Similarly, travel insurance products are subject to extensive regulation and supervision by the applicable regulators in the United Kingdom, Canada, Australia and the European Union. The failure to comply with applicable state and foreign laws and regulations could result in fines, investigations and/or civil or criminal proceedings against us by governmental agencies and/or consumers which, if material, could adversely affect our business, results of operations, and financial condition.
Additionally, insurance carriers with which we place business are subject to regulations, which may affect how we conduct our operations. We may need to expend resources to address questions or concerns regarding our relationships with these insurers and underwriters, diverting resources away from operating our business, which could adversely affect our business, results of operations, and financial condition.
Brand / Reputation1 | 1.9%
Brand / Reputation - Risk 1
We rely on the value of our brand and traffic to our platform to grow revenue, and if we are unable to market our brand and drive traffic cost-effectively, it would materially adversely affect our business, results of operations, and financial condition.Changed
Macro & Political
Total Risks: 4/53 (8%)Below Sector Average
International Operations1 | 1.9%
International Operations - Risk 1
If we are unable to successfully expand our global network or manage the risks presented by our business model internationally, our business, results of operations, and financial condition would be materially adversely affected.Natural and Human Disruptions2 | 3.8%
Natural and Human Disruptions - Risk 1
Any decline or disruption in the travel and hospitality industries or economic downturn could materially adversely affect our business, results of operations, and financial condition.Natural and Human Disruptions - Risk 2
We are subject to risks associated with the physical impacts of climate change as well as various efforts to transition to a low-carbon society.Added
There are inherent climate-related risks wherever business is conducted. For example, the physical impacts of climate change (which may include more frequent or severe storms, extreme weather events, extreme temperatures and ambient temperature increases, hurricanes, flooding, rising sea levels, shortages of water, droughts, wildfires, and natural disasters) may interrupt infrastructure on which our platform relies, impact demand or supply for lodging, or otherwise adversely impact our business. Climate change is expected to increase the frequency and severity of certain such events, as well as contribute to chronic changes (such as changes to meteorological and hydrological patterns) that may also impact the behaviors of guests and hosts or infrastructure on which we rely.
Growing awareness of climate and other environmental or social pressures, including over-tourism, has also prompted responses by various actors in society, which may adversely impact the travel and hospitality industries and demand for our platform and services, whether due to the imposition of policies and regulations or changing societal attitudes towards travel. For example, both we and hosts are increasingly subject to regulatory requirements related to climate-related considerations, and any additional regulations may require increased costs or attention for compliance. Our platform and services may also be adversely impacted to the extent travel behavior or other societal expectations shift in response to climate considerations, including if we do not successfully navigate stakeholder expectations regarding our own response to climate change.
Economic and Market Risks
Capital Markets1 | 1.9%
Capital Markets - Risk 1
A significant portion of our bookings and revenue are denominated in foreign currencies, and our financial results are exposed to changes in foreign exchange rates.See a full breakdown of risk according to category and subcategory. The list starts with the category with the most risk. Click on subcategories to read relevant extracts from the most recent report.
FAQ
What are “Risk Factors”?
Risk factors are any situations or occurrences that could make investing in a company risky.
The Securities and Exchange Commission (SEC) requires that publicly traded companies disclose their most significant risk factors. This is so that potential investors can consider any risks before they make an investment.
They also offer companies protection, as a company can use risk factors as liability protection. This could happen if a company underperforms and investors take legal action as a result.
It is worth noting that smaller companies, that is those with a public float of under $75 million on the last business day, do not have to include risk factors in their 10-K and 10-Q forms, although some may choose to do so.
How do companies disclose their risk factors?
Publicly traded companies initially disclose their risk factors to the SEC through their S-1 filings as part of the IPO process.
Additionally, companies must provide a complete list of risk factors in their Annual Reports (Form 10-K) or (Form 20-F) for “foreign private issuers”.
Quarterly Reports also include a section on risk factors (Form 10-Q) where companies are only required to update any changes since the previous report.
According to the SEC, risk factors should be reported concisely, logically and in “plain English” so investors can understand them.
How can I use TipRanks risk factors in my stock research?
Use the Risk Factors tab to get data about the risk factors of any company in which you are considering investing.
You can easily see the most significant risks a company is facing. Additionally, you can find out which risk factors a company has added, removed or adjusted since its previous disclosure. You can also see how a company’s risk factors compare to others in its sector.
Without reading company reports or participating in conference calls, you would most likely not have access to this sort of information, which is usually not included in press releases or other public announcements.
A simplified analysis of risk factors is unique to TipRanks.
What are all the risk factor categories?
TipRanks has identified 6 major categories of risk factors and a number of subcategories for each. You can see how these categories are broken down in the list below.
1. Financial & Corporate
- Accounting & Financial Operations - risks related to accounting loss, value of intangible assets, financial statements, value of intangible assets, financial reporting, estimates, guidance, company profitability, dividends, fluctuating results.
- Share Price & Shareholder Rights – risks related to things that impact share prices and the rights of shareholders, including analyst ratings, major shareholder activity, trade volatility, liquidity of shares, anti-takeover provisions, international listing, dual listing.
- Debt & Financing – risks related to debt, funding, financing and interest rates, financial investments.
- Corporate Activity and Growth – risks related to restructuring, M&As, joint ventures, execution of corporate strategy, strategic alliances.
2. Legal & Regulatory
- Litigation and Legal Liabilities – risks related to litigation/ lawsuits against the company.
- Regulation – risks related to compliance, GDPR, and new legislation.
- Environmental / Social – risks related to environmental regulation and to data privacy.
- Taxation & Government Incentives – risks related to taxation and changes in government incentives.
3. Production
- Costs – risks related to costs of production including commodity prices, future contracts, inventory.
- Supply Chain – risks related to the company’s suppliers.
- Manufacturing – risks related to the company’s manufacturing process including product quality and product recalls.
- Human Capital – risks related to recruitment, training and retention of key employees, employee relationships & unions labor disputes, pension, and post retirement benefits, medical, health and welfare benefits, employee misconduct, employee litigation.
4. Technology & Innovation
- Innovation / R&D – risks related to innovation and new product development.
- Technology – risks related to the company’s reliance on technology.
- Cyber Security – risks related to securing the company’s digital assets and from cyber attacks.
- Trade Secrets & Patents – risks related to the company’s ability to protect its intellectual property and to infringement claims against the company as well as piracy and unlicensed copying.
5. Ability to Sell
- Demand – risks related to the demand of the company’s goods and services including seasonality, reliance on key customers.
- Competition – risks related to the company’s competition including substitutes.
- Sales & Marketing – risks related to sales, marketing, and distribution channels, pricing, and market penetration.
- Brand & Reputation – risks related to the company’s brand and reputation.
6. Macro & Political
- Economy & Political Environment – risks related to changes in economic and political conditions.
- Natural and Human Disruptions – risks related to catastrophes, floods, storms, terror, earthquakes, coronavirus pandemic/COVID-19.
- International Operations – risks related to the global nature of the company.
- Capital Markets – risks related to exchange rates and trade, cryptocurrency.