Airbnb reaches US$47b value in above-range IPO

[SAN FRANCISCO] Airbnb priced its long-awaited initial public offering (IPO) above a marketed range to raise about US$3.5 billion, capping a year in which it bounced back from the coronavirus pandemic by capitalising on closer-to-home travel.

The home-rental company's IPO came just hours after DoorDash 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 are selling about 52 million shares on Wednesday for US$68 each after marketing them for US$56 to US$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 US$47 billion, which includes employee stock options and restricted stock units.

A representative for Airbnb declined to comment.

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

DoorDash's first-day surge propelled its valuation, including employee stock options and restricted stock units, to about US$71 billion. An increase of a little more than 51 per cent when Airbnb shares begin trading on Thursday would push the company's valuation past that of DoorDash.

PANDEMIC CRUSH

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

In a letter to shareholders, the three co-founders said the 10 months since the pandemic 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 per cent. Airbnb rolled out a blanket refund policy and doled out more than US$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 was proving resilient. In the third quarter, Airbnb's revenue declined only 18 per cent, compared to the near 60 per cent decline for Expedia Group and Marriott International. The three-month period was also Airbnb's most profitable, based on earnings before interest, taxes, depreciation and amortisation.

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

BLOOMBERG