In its stock market debut on Thursday, Airbnb Inc’s shares more than doubled, valuing the home rental company at just over $100 billion in 2020’s largest U.S. initial public offering (IPO) and capping a bumper year in which investors flocked to tech stocks.
Airbnb launched on the Nasdaq at $146, well above the $68 per share IPO price that raised $3.5 billion for the venture. The stock reached a high of 165 dollars and closed at 144.71 dollars.
After the company’s business was severely impaired by the COVID-19 pandemic earlier this year the IPO is the result of a remarkable turnaround in Airbnb’s fortunes.
But more travellers chose to book homes instead of hotels as lockdowns eased, helping Airbnb report a surprise profit for the third quarter. The business based in San Francisco has benefited from increased interest in the rental of homes away from major cities.
“I don’t think too many people expected to see an Airbnb IPO this year this summer,” Airbnb Chief Executive Brian Chesky said in an interview with Reuters.
We were planning to go public, we were putting our IPO on hold, and this was the most incredible journey. “Chesky, whose Airbnb stake is now worth around $11 billion, added, “It’s been quite a comeback for our hosts and for what I hope will be travel.
Established in 2008 as a platform for conference room bookings, the listing by Airbnb was one of the most awaited U.S. IPOs in 2020, which has already been a record year for listings on the stock exchange.
In the past few months, record label Warner Music Group, data analytics firm Palantir Technologies and data warehouse firm Snowflake Inc have all gone public.
Airbnb had a market capitalization of $86.5 billion at the beginning of trading on the Nasdaq, eclipsing that of online travel agency Booking Holdings Inc and hotel chain Marriott International Inc.
Airbnb’s completely diluted valuation came to $100.7 billion, including shares such as options and limited stock units, more than five times the $18 billion Airbnb was worth at the beginning of the pandemic in a private fundraising round in April. In its last pre-COVID-19 private fundraising in 2017, Airbnb’s value was estimated at $31 billion.
The eye-popping increase in the stock of Airbnb on its debut comes only a day after the share price of DoorDash Inc, a food delivery firm, doubled on the first day of trading.
Some venture capital investors, including Benchmark’s Bill Gurley, who claim that investment banks underprice IPOs so that their investor customers can score big profits when the stock begins to trade, are likely to fuel criticism of such large first-day trading gains. Via a direct listing in which bankers have no control over the price at which stock is sold, these advocates have encouraged businesses to consider listing shares.
