Airbnb Skyrockets 120% In IPO, Valuation Blows Past $100 Billion–More Than Marriott, Hilton And Hyatt Combined

Topline

A day after DoorDash’s massive public market debut–and amid the busiest December for IPOs ever–shares of Airbnb skyrocketed 120% during the home rental giant’s long-awaited first day of trading, propelling the firm’s market cap to more than five times its last private market valuation despite the damper the pandemic is putting on the travel industry.

Key Facts

Listed on the technology-heavy Nasdaq exchange under the ticker ABNB, shares of the home rental platform started trading at about 1:35 p.m. EST and nearly immediately surged to a price of more than $150 from an offering price of $68 on Wednesday.

The booming stock price boosted the firm’s valuation to roughly $103 billion, compared to $18 billion after the firm’s last private funding round in April.

San Francisco-based Airbnb has raised roughly $3.5 billion with its initial public offering, according to financial about platform Dealogic, besting the $3.4 billion raised by DoorDash on Tuesday to become the year’s third-largest IPO.

“I don’t know what to say,” CEO Brian Chesky told Bloomberg TV on Thursday morning in light of whispers of the massive stock surge before shares started trading. “The higher the stock price, the higher the expectations.”

The firm originally upped its target price range to between $56 and $60 on Monday–higher than original expectations topping out at $50 per share, which would’ve valued the firm at roughly $35 billion.

The broader market Thursday was lukewarm when Airbnb started trading, with the S&P 500 and the Dow Jones Industrial Average both virtually flat, while the Nasdaq edged up 0.6%.

Key Background

After years of reportedly shying away from publicly listing Airbnb’s shares, opting instead for VC funding, Chesky succumbed to investor pressure in 2019, saying the firm would go public sometime this year. After the pandemic roiled Airbnb’s business in the spring, some market observers doubted Airbnb could pull off its plans, but a cash-stripped Chesky reportedly signed off on the IPO in late July. Fleeing citydwellers, meanwhile, have helped prop up Airbnb’s business as the coronavirus continues to spread across the country, and when the company filed to go public in November, it revealed a surprise profit of $219 million in the third quarter, though it’s still never turned an annual profit. Chesky cofounded Airbnb with Nathan Blecharczyk and Joe Gebbia in August 2008 after an idea spurred by a design conference, and all three are now billionaires.

Crucial Quote 

“While Airbnb has recovered from the gut-punch of the pandemic’s early days, the trendline is turning negative: The platform has seen a decrease in both user acquisition and order frequency since July 2020 and is further being pulled down by a shrinking lodging sector,” noted consumer-spending data firm Cardify in a pre-IPO report. “However, Airbnb remains a strong player in the weakened sector, seeing a growing share of the market as traditional hotel chains struggle to stay afloat.”

Surprising Fact

Airbnb’s debut market capitalization is more than those of the nation’s three largest hotel chains combined. On Thursday, Marriott International, Hilton Worldwide and Hyatt Hotels had market caps of $43 billion, $39 billion and $8 billion, respectively. 

What To Watch For

December IPOs are far from over. Three other big-tech IPOs are on deck for this month, though specific dates have yet to be lined up. Gaming platform Roblox, fintech startup Affirm and discount e-commerce platform Wish have said they’re looking to raise $1 billion, $100 million and $1.1 billion, respectively.

Big Number

$9 billion. That’s roughly how much the six offerings thus far announced for December are on track to raise, the most for a December ever since $8.3 billion was raised in 2001 and 2003, according to Bloomberg data.

Further Reading

DoorDash IPO: Shares Surge 80% At Start Of Trading, Boosting Valuation To $60 Billion In Year’s Third-Largest IPO (Forbes)

Airbnb, DoorDash And Billionaire Tom Siebel’s C3.ai Are Upsizing Their Public Market Debuts, Revving Up Biggest December For IPOs Ever (Forbes)

These Stocks Have The Most To Gain From Covid-19 Vaccine-Making And Distribution, According To Bank Of America (Forbes)

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