Sunday, January 17, 2021

Airbnb prices are well above the range as IPO frenzy continues

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Airbnb has priced its IPO at $ 68 per share, well above its target range, a sign of investor confidence in Airbnb’s home-sharing business and the long-term recovery of the travel industry as a whole.

The price, confirmed by two people with knowledge of the matter, means the short-term rental company raised $ 3.4 billion through the offer, ahead of its Nasdaq debut on Thursday. He previously said he expected his shares to sell for between $ 56 and $ 60 each.

The higher-than-expected price follows a strong start for DoorDash, the food delivery company, which enjoyed a soft drink on the first day by about 85% Wednesday, reaching a market cap of $ 60 billion.

At its bid price, Airbnb’s implied market cap of $ 40.6 billion would be higher than rival tour operator Expedia – $ 18.2 billion – but still eclipsed by Booking.com, currently valued at 86. $ 3 billion.

Airbnb declined to comment on pricing.

Strong demand for its IPO caps a rapid turnaround of the San Francisco-based company, who, in the depths of the Covid-19 disruption in May, was forced to raise $ 2 billion in emergency funds as bookings fell by more than 70% globally.

Against its competitors, Airbnb’s revenue and bookings have been relatively less hit by the pandemic. In the third quarter of this year, the company returned to profit of $ 219 million, after suffering a loss of $ 576 million in the previous quarter.

The rebound reflected domestic travel, particularly from customers who chose to work remotely in Airbnb accommodation for a month or more, but also the impact of drastically cutting costs. The company has pulled out of activities outside of its main home-sharing offering, suspended nearly all marketing, and laid off a quarter of its staff.

The company warned, however, that reinstating lockdowns would lead to a difficult end of the year. Data from Edison Trends suggests U.S. spending on Airbnb has fallen by about a third since early October.

“Even if [Airbnb has] obviously been hurt by the pandemic, like all travel it should really benefit from most of the first tailwinds as people start to come out of their hiding places, ”said Max Gokhman, Head of Asset Allocation at Pacific Life Fund Advisors.

Brian Chesky, CEO of Airbnb, will own a $ 5.2 billion stake at the IPO price. He and his co-founders, Joe Gebbia and Nathan Blecharczyk, will retain 42.2% of the public company’s voting rights. The founders were to sell 1,551,723 shares as part of the offer, for approximately $ 106 million at the IPO price, in addition to the $ 3.4 billion raised by the company.

Pricing also potentially reflects a lack of fear that the company’s prospects will be hampered by regulation. Restrictions on short-term rentals had been imposed in about 70% of Airbnb’s 200 largest cities, the company said in its prospectus, but said it was not concerned about the material impact of the move. regulations in the future on its largest cities.

In its filing, Airbnb said 3.5 million shares – up to 7% of the total supply – would be made available to hosts, prioritizing those who have been on the platform for longer. if the offer was oversubscribed.

Morgan Stanley and Goldman Sachs are the main underwriters of the IPO.

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