Airbnb opens at $ 146 per share, or 114.7% above IPO price
Airbnb (ABNB) stock was opened for trading on the Nasdaq at $ 146 per share on Thursday, significantly exceeding its initial public offering price as traders grabbed shares in the new public company.
The shares hit $ 165 each during the day on Thursday before slashing gains and closing at $ 144.71, up 113% from its IPO price of $ 68 per share on Wednesday night. Airbnb’s fully diluted valuation was over $ 100 billion, up from its last private valuation of $ 18 billion last spring.
The day before, the company had raised $ 3.5 billion when it went public, after selling more than 50 million shares at $ 68 each.
As its public debut nears, demand for Airbnb shares has continued to rise. Earlier this week, the San Francisco-based company said it plans to market shares between $ 56 and $ 60 apiece to raise as much as $ 3.1 billion on a valuation of $ 42 billion. That range was in turn increased from $ 44 to $ 50 per share earlier in December, reflecting growing demand for the company’s shares.
Airbnb’s first day of trading comes a day after DoorDash, which was also made public with a larger IPO. DoorDash’s market cap at the end of its first day of trading was over $ 60 billion, after being valued at $ 16 billion in private markets earlier this year.
Given the exuberance, some analysts have cautioned investors seeking to immediately join the frenzy surrounding these new companies.
“My take on the hot IPO is that you don’t do anything outside the gate,” Heritage Capital chairman Paul Schatz told Yahoo Finance. “Unless you have friends and family shares, you just sit back and watch, and there’s a three to six month period where the vast majority… lower.”
“Always a fascinating story”
Like many travel agencies, Airbnb has been hit hard this year by the coronavirus pandemic. Home rental software platform saw revenue drop 32% to $ 2.5 billion in the first nine months of this year from 2019, although its revenue decline has improved at 18% in the third quarter in particular. Its net losses also more than doubled to $ 697 million in the first nine months of this year.
Amid those concerns, the company raised $ 2 billion in debt financing earlier this year and laid off about 1,900 workers, or 25% of its workforce. And he hinted at an uncertain post-virus future in his prospectus, noting that, “Even after the lifting of shelter-in-place orders and travel advisories, demand for our offerings, especially those related to cross-border travel. , can remain depressed for a significant length of time, and we cannot predict if and when demand will return to pre-COVID-19 levels. “
At the same time, some analysts have suggested that Airbnb’s struggles this year have forced it to become a leaner company better equipped to break into public markets.
Airbnb “has shown that they are able to right the ship through a very difficult time. They took up debt and laid off their jobs, they really focused on the essentials of their business, ”EquityZen’s Brianne Lynch told Yahoo Finance. “And what they sell to investors is that the best is yet to come when the trips return, so I think there’s still a compelling story for them.”
“I would say the pandemic has forced them to really become more disciplined and maybe become a public market type business, and they’ve taken every step to do that, and they’ve been very disciplined in that way,” he said. she added. “They paint this fiscal responsibility story and I think it’s something that will resonate more with investors.”
In addition, the company had experienced strong growth before the pandemic. Its revenue jumped more than 30% year-on-year in fiscal 2019 to $ 4.8 billion, and its gross booking value – or the total amount paid by customers, including fees – rose 29% to $ 38 billion.
And Airbnb still maintains a large base of hosts offering their homes on the platforms, and guests looking for accommodation and experiences. The company has 4 million hosts worldwide, 86% of which are based outside of the United States. The hosts cover more than 220 countries and regions and approximately 100,000 cities. And last year, 54 million active users worldwide booked 327 million nights and experiences through Airbnb.
Airbnb is making its public debut in a year when traders have been particularly open to new public companies, with stock traders largely examining lingering concerns over COVID-19 and in preparation for the expected sustained economic reopening l ‘next year. Prospects for massive vaccine distribution in the coming months have propelled the broader market to record highs, with cyclical stocks, especially airlines and cruise lines, being particularly boosted. The activities of these companies, like those of Airbnb, are closely tied to reopening and returning travel demand.
Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck
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