Airbnb’s IPO resulted in a market frenzy, raising $3.5 billion

Dec 14, 2020

The frenzy around Airbnb’s initial public offering (IPO) tore through the financial sector, which has seen more companies go public this year than any since the dot-com craze of the ’90s. DoorDash went public on Wednesday, soaring 85%, while Airbnb managed to raise $3.5 billion during its IPO on Thursday, 10th December.

Thousands of hosts were offered the opportunity to buy the stock ahead of the IPO. The hosts who’ve been active on Airbnb for longer were able to purchase more shares. In total, Airbnb sold 51,551,723 Class A shares to hosts, at $68 per share. The next day, at its public debut Airbnb opened at $146 per share – 114.7% up from the previous day.

Airbnb (ABNB) filed its IPO listing in November of 2020 and finally went public on 10th December with Morgan Stanley and Goldman Sachs as head underwriters. The company was originally planning to go public at the beginning of the year; however, as with many other sectors, the COVID – 19 pandemic interfered and caused delays. In fact, the company had barely survived the first wave of the deadly virus – having to lay off 25% of its staff and borrow capital to make ends meet.

“Revenues dropped 80% in the span of two weeks. And the most difficult thing was, we didn’t know how long it was going to last,” Airbnb co-founder Nathan Blecharczyk told NPR.

The vacation rental company was able to bounce back from the horrible beginning of the year and had a profitable 3rd quarter. Since its inception, Airbnb has not had a full profitable year and worries that it never will, a fact that they willingly disclosed while filing for the IPO. Nonetheless, Airbnb’s market capitalization makes it more valuable than Hilton’s hotel chains, Marriot, and Intercontinental combined. Airbnb is one of the largest online travel companies with an $82.9 billion market capitalization, cutting it real close to Booking’s $85.5 market cap.

Since it was founded, Airbnb has upended the rental stay market, allowing home-owners to generate profit while providing cozy accommodation for vacationers. While many other companies offer the same or similar services, Airbnb remains at the forefront of the market. Presumably due to the number of available rooms and the variety of accommodation available. Airbnb lists approximately 7 million rooms, and the options range from treehouses to castles all across the globe.
Prior to the IPO, Airbnb’s investors consisted of 57 notable businesses and individuals. Those included Silver Lake, CapitalG, TCV, FirstMark, and many more. Today, there is no way of telling how this IPO frenzy will play out in the long run. While many hosts are kicking themselves for missing the opportunity to purchase the shares at their initial price, some analysts advise investors to take heed.

With prospects of globally-available vaccines and Gen-Xers travel bug tendencies, it’s hard to imagine that an investment in one of the top travel companies is a bad idea.