Airbnb hits $47 billion value in IPO, adding to record year

By: |
December 10, 2020 12:08 PM

In the third quarter, Airbnb’s revenue declined only 18%, compared to the near 60% decline for Expedia Group Inc. and Marriott International Inc.

The company’s IPO plans were put on hold in March as the pandemic ground global travel to a halt.

Airbnb Inc. priced its long-awaited initial public offering above a marketed range to raise about $3.5 billion, seizing on investor demand for a home-rental business roaring back from a pandemic-fueled slump. The company’s IPO came just hours after DoorDash Inc. almost doubled from its listing price in its debut trading session, adding to a flurry of consumer-facing web-based companies going public this month.

Airbnb and its investors sold about 52 million shares Wednesday for $68 each after marketing them for $56 to $60 each, said people familiar with the matter who asked not to be identified because the information wasn’t public yet. At that price, Airbnb has a fully diluted value of about $47 billion, which includes employee stock options and restricted stock units.

Airbnb’s listing adds to what was already a record year for IPOs, with more than $163 billion raised on U.S. exchanges, according to data compiled by Bloomberg. That includes DoorDash’s $3.37 billion offering. Other companies lined up for IPOs this month include video-game company Roblox Corp., installment loans provider Affirm Holdings Inc. and ContextLogic Inc., the parent of online discount retailer Wish Inc.

DoorDash’s first-day surge propelled its valuation, including employee stock options and restricted stock units, to about $71 billion.

For Airbnb to hang on to any lofty valuation, it will need to grapple with a litany of threats, as outlined in its IPO prospectus, ranging from a surge in party houses that carry liability risks to an increase in professionally run properties that lack the charm that made Airbnb rentals famous.

Pandemic Crush

San Francisco-based Airbnb has seen a bounce back in domestic bookings since the early days of the coronavirus pandemic crushed demand.

In a letter to shareholders, the three co-founders said the 10 months since the pandemic started have been “the most defining period since we started Airbnb.”

In the past 13 years, Airbnb has totally upended the travel market, given people an opportunity for income and created a whole new market for services related to real estate and hosts. Today, Airbnb is one of the biggest travel companies in the world.

The company’s IPO plans were put on hold in March as the pandemic ground global travel to a halt. By April, room bookings had plunged 72%. Airbnb rolled out a blanket refund policy and doled out more than $1 billion in cancellation fees.

By June, though, things were starting to look up. City dwellers who were sick of being stuck inside their homes got in their cars and drove to mountain towns and rural communities, often setting up for weeks or months at a time as work-from-home policies allowed.

Domestic Boost

International travel was down, but demand for domestic, short-distance trips and stays outside of the top 20 cities proved resilient. In the third quarter, Airbnb’s revenue declined only 18%, compared to the near 60% decline for Expedia Group Inc. and Marriott International Inc. The three-month period was also Airbnb’s most profitable ever, based on earnings before interest, taxes, depreciation and amortization.

For the first nine months of 2020, Airbnb had a net loss of $697 million on revenue of $2.5 billion, compared with a net loss of $323 million on revenue of $3.7 billion for the same period last year, according to its filings.

Airbnb’s offering is being led by Morgan Stanley and Goldman Sachs Group Inc. Shares of Airbnb are expected to trade on the Nasdaq Global Select Market under the symbol ABNB.

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