Wednesday, February 28, 2024

Airbnb and DoorDash raise prices ahead of hit week for IPOs

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December is set to be the busiest end of the year on record for initial public offerings in the United States, with DoorDash Inc. and Airbnb Inc. set to start trading this week in long-awaited listings.

The two startups, which aim to raise a combined $ 6.2 billion at the top of their price bracket, will propel the month’s IPO volume to an all-time high, surpassing the set $ 8.3 billion mark. in December 2001 and 2003, according to data compiled by Bloomberg. IPOs on U.S. stock exchanges have already raised a record $ 156 billion this year, the data shows.

Both listings received an extra boost as companies moved into the final phase of marketing their stocks. DoorDash raised the price range of its stock in a Friday filing, while Airbnb plans to follow suit and increase its price range ahead of its IPO, people familiar with the matter said Sunday. Each of the companies is now expected to raise up to $ 3.1 billion, placing them among the top five U.S. IPOs of 2020.

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Private companies that escaped market chaos at the start of the COVID-19 pandemic – and were awaiting the final outcome of the U.S. election – are now rushing to go public. Airbnb and DoorDash will be quickly followed by three more mega-listings that could add billions of dollars to the IPO tally.

Affirm Holdings Inc., which allows online shoppers to pay for purchases such as Peloton bikes in installments, online video game company Roblox Corp. and ContextLogic Inc., the parent company of discount online retailer Wish . Each is likely to reach a valuation of tens of billions of dollars in its listing.

“This group of companies that you’ve just released now may not have initially been seen as benefiting, but they’ve been able to show very good results despite the coronavirus,” said Karen Snow, East Coast Lists Manager at Nasdaq Inc.

Airbnb aims to be valued at $ 42 billion when it goes public, while DoorDash could reach a valuation of around $ 35 billion, based on their updated price ranges. For DoorDash, that’s more than double the private appraisal it hit during a fundraiser in June, after taking advantage of the explosion in demand for meals delivered to your door, fueled by the pandemic . Airbnb was valued at $ 18 billion in April after taking on additional debt to shore up its finances. The company, which was initially hit hard by global travel restrictions, has recently seen a boom in customers seeking longer-term domestic rentals.

Business Fundraising at the top IPO valuation Status
By Dash $ 3.1 billion $ 35 billion high end Pricing on December 8, negotiation on December 9
Airbnb $ 3.1 billion $ 42 billion in high-end Pricing December 9, negotiation December 10 $ 527 million $ 3.29 billion (approximately) Pricing on December 8, negotiation on December 9
Roblox To be determined To be determined Publicly filed
To affirm To be determined To be determined Publicly filed
Wish To be determined To be determined Publicly filed

Airbnb’s IPO will also be a lucrative event for many of its employees. The company has offered billions of dollars in stock compensation to staff, like Uber Technologies Inc. and other large venture-backed companies that have gone public. The IPO will make some of its longtime employees paper millionaires.

Time and money

Earlier this year, tech IPOs were dominated by enterprise software companies such as Snowflake Inc., which has climbed more than 200% since it went public to $ 110 billion. The group of public entities soon to be created this month – all based in the San Francisco Bay Area – are reaching out to consumers stuck at home with extra time and money.

If registrations go well, it could indicate that investors are optimistic about an economic rebound after the dark days of the pandemic.

“There is a lot of support and interest from institutional investors for companies that are affected by COVID because the feeling is that they are going to recover,” said Neil Kell, vice president of global markets. equity of Bank of America Corp.

“The spirit is not that we are in December 2020,” he said. “The mindset is what it’s going to look like a year from now.”

A list of enterprise software is also expected this week. Inc., founded by the former Oracle Corp. executive Tom Siebel is expected to raise up to $ 527 million when it goes public.

Demand assessment

Bankers are using new methods to execute those large share sales, incorporating technology that has been in development for years and was well chosen during the pandemic, when potential buyers cannot meet with company executives and advisers. in person.

Airbnb, DoorDash and Roblox have asked potential IPO investors to complete their trade orders through an online portal, indicating their level of interest at any desired cost, according to people with knowledge of the matter, who asked not to be identified as the details are private.

The new process aims to help issuers and their advisers assess demand, especially for high-growth companies with large valuation differences between investors, the sources said. The final price and allocation of shares is always determined by the seller.

Representatives of the companies declined to comment.

Unity Software Inc., used the same system when it went public in September. Unity sold its shares for $ 52 each and ended its first day of trading at $ 68.35. The shares closed Friday at $ 150.94 each.

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