Traveling far and wide: Airbnb’s IPO breaks 2020 records | Financial market news
Airbnb has made a comeback as coronavirus-wary travelers showed a preference for renting private homes over hotel rooms.
Shares of Airbnb Inc more than doubled in the company’s stock market debut on Thursday, valuing the home rental company at just over $100 billion in the biggest U.S. initial public offering of 2020 and capping a bumper year in which investors flocked to tech stocks.
Airbnb opened at $146 on the Nasdaq, well above the initial public offering (IPO) price of $68 per share that raised $3.5 billion for the company. The stock hit a high of $165 and closed at $144.71.
The IPO is the culmination of a stunning recovery in Airbnb’s fortunes after the company’s business was badly damaged by the COVID-19 pandemic earlier this year.
But as the lockdowns eased, more travelers opted to book homes instead of hotels, helping Airbnb post a surprise third-quarter profit. The San Francisco-based company has also benefited from increased interest in renting homes away from major cities.
“I don’t think this summer too many people expected to see an Airbnb IPO this year,” Airbnb chief executive Brian Chesky said in an interview with Reuters news agency. .
“We planned to go public, we put our IPO on hold and it’s been the most amazing journey. It’s been quite a comeback for our hosts and what I hope will be a journey,” added Chesky, whose Airbnb’s share is now worth around $11 billion.
Founded in 2008 as a website to take room reservations at conferences, Airbnb had a listing that was one of the most anticipated U.S. IPOs of 2020, which has already been a banner year for stock listings. .
Record label Warner Music Group, data analytics company Palantir Technologies and data warehouse company Snowflake Inc have all gone public in recent months.
At the start of trading on the Nasdaq, Airbnb had a market capitalization of $86.5 billion, eclipsing that of online travel agency Booking Holdings Inc and hotel chain Marriott International Inc.
Including securities such as options and restricted stock, Airbnb’s fully diluted valuation was $100.7 billion, more than five times Airbnb’s $18 billion in a raise. of private funds in April at the start of the pandemic.
Airbnb was valued at $31 billion in its last pre-COVID-19 private fundraiser in 2017.
The meteoric rise in shares of Airbnb in its debut comes just a day after food delivery company DoorDash Inc’s share price doubled on its first day of trading.
Such large first-day trading gains are likely to fuel criticism from some venture capitalists, including Benchmark’s Bill Gurley, who argue that investment banks undervalue IPOs so their clients investors can realize significant gains when the stock begins trading.
These proponents have pushed companies to consider listing their shares through a direct listing, in which bankers have little influence over the price at which shares are sold.
Chesky said Airbnb would focus on things that were under the company’s control.
“At this point, the stock price is not something we control. I have encouraged our employees to focus on the things they can control,” Chesky said, speaking before the stock. does not begin to trade.