Airbnb IPO public debut: $68 per share, valuation of $47 billion

The company raised its initial share price, but will investors bite?

Pandemic hits the sharing economy: Uber and Airbnb announce massive layoffs

Airbnb is set to make its debut into the market with an Initial Public Offering (IPO) floating at a price of $68 per share. 

Due to launch on the Nasdaq at market open on December 10, the short-term rental and booking platform upped the price of its IPO shares a day earlier, perhaps betting on investor enthusiasm for technology-related public offerings over the past few years. 

In total, 51,323,531 shares of Class A common stock -- 50 million sold by Airbnb and the remainder by selling stockholders -- are on offer at a public price of $68 per share, valuing the company at roughly $47 billion

The shares will be offered under the ticker "ABNB."

Airbnb hopes to raise approximately $3.4 billion, excluding underwriter options to buy an additional 50 million shares at IPO pricing. 

It was only last week that the San Francisco-based company said IPO pricing would fall between $44 and $50 per share. 

The company filed its intent to launch an IPO with the US Securities and Exchange Commission (SEC) in November, citing increased domestic travel and remote work as reasons for a steady uptick in bookings, despite a demand slump of 20% year-on-year due to the disruption caused by the COVID-19 pandemic. 

In May, Airbnb axed a quarter of its workforce -- roughly 1,900 employees -- due to the bookings crash and pandemic-related travel restrictions. As of December 31, 2019, and September 30, 2020, net losses and deficits were reported as $1.4 billion and $2.1 billion, respectively. 

The initial public offering, although, perhaps, at an unusual time to file for a market launch, could provide additional funding to keep Airbnb afloat while it weathers the storm the travel industry is experiencing. 

Airbnb's IPO may turn out to be one of the biggest of 2020, although investor thoughts on jumping in appear to be mixed. Market open pricing may be higher for regular investors if orders pile up  -- a common situation with popular IPOs -- and across a number of forums, some question whether or not the stock will spike and dip or carry momentum into the new year, such as in the case of Snowflake's IPO. 

DoorDash, too, closed on day one of its IPO with a share value 86% higher than its initial trading price.

As Airbnb is in the process of recovery from 2020's disastrous ramifications for the travel industry at large -- not to mention how stock markets have been shaken over the past 12 months -- it's hard to predict how the company will perform following its IPO. 

However, given the levels of interest, it appears likely that initial trading prices will go beyond $68 per share, and potentially will be far higher at market open.

The exception to this is the company's directed share program, which has offered a limited amount of shares at pre-IPO prices to long-standing hosts in the United States.

"Airbnb's proposal to list on the Nasdaq comes as little surprise in view of the current enormous valuations accorded to anything 'tech'. Asset prices continue to balloon as cash seeks to find a home with high growth rates," commented Professor John Colley, Associate Dean at Warwick Business School. "However, the risks are significant. Airbnb still makes substantial losses after 12 years and was effectively rescued from COVID in April 2020 with $2Bn from private equity. Clearly, the backers are looking for a rapid sell out and profit."

Update 17.30 GMT: Airbnb shares are set to open at $149.

Previous and related coverage


Have a tip? Get in touch securely via WhatsApp | Signal at +447713 025 499, or over at Keybase: charlie0