Sunday, December 3, 2023

Airbnb debuts in latest IPO rebound

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The year of the Wall Street crisis and boom pandemic will be capped by one of tech’s biggest IPO bubbles in years, as shares in vacation rental firm Airbnb have started trading on Thursday well above their price.

Shares opened at $ 146, a massive jump from the $ 68 Airbnb sold them to new investors late wednesday, and more than three times the $ 44- $ 50 range the company gave last week.

That opening price values ​​the loss-making company at $ 87.2 billion, more than double the market capitalization of the world’s largest hotel group, Marriott.

Coming the next day DoorDash delivery company Equally dramatic on the stock market, taking its valuation above $ 70 billion, Airbnb’s performance sparked inevitable comparisons with the first dot-com bubble, which peaked over 20 years ago.

A flood of liquidity has supported fast-growing tech stocks this year, at a time when much of the stock market – and the global economy – is stuck in the doldrums. Zoom, the emblem of home working and one of the hottest IPOs of last year, at one point, valued at $ 160 billion.

But the biggest IPO success of 2020 could be a company few people have even heard of – Snowflake, a data analysis group from San Francisco. Its market value this week topped $ 120 billion, eclipsing the once-dominant IBM.

“Twenty years ago, the dot-com bubble is increasingly the appropriate comparison,” said Jay Ritter, an IPO expert at the University of Florida. “At the time, the valuation of internet stocks was separate from the general market. Once again, we are witnessing this detachment.

Other analysts said the latest stock market euphoria was largely confined to the IPO market and a handful of hot stocks like electric car maker Tesla, suggesting that a different mindset was at work. .

“This seems to be a phenomenon brought on by IPOs – we’re not back in 2000,” said Richard Clarke, analyst at Bernstein. “It’s at the end of the year, it’s a great way to generate profits. You can’t afford to miss it. Investors were partly looking for ways to bet on a rebound in the travel sector next year, he added, which had fueled demand for Airbnb.

Airbnb’s splashy debut on the stock market comes despite damage to its business from the pandemic, which forced it to downsize its staff and raise emergency funding to avert disaster earlier this year.

Brian Chesky, CEO of Airbnb, struggled to find words on CNBC as he recalled the crisis. “This prize would have cost us around $ 30,” he said of the emergency funding. “I don’t know what else to say. I am very honored.

Mr. Chesky has a stake of over $ 11 billion at the opening price. He and his co-founders, Joe Gebbia and Nathan Blecharczyk, will retain 42.2% of the public company’s voting rights. The founders sold 1.5 million shares as part of the offering, or about $ 106 million at the IPO price, while the company raised $ 3.4 billion in new money .

“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.


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