Airbnb is ready to go public, which is expected to be one of the hottest stock market listings of the year. The long-awaited move from this popular vacation rental company has excited many. Being one of the travel industry’s biggest names, many investors have been waiting to buy Airbnb stock.
Talks of an Airbnb IPO had been circling for some time before the coronavirus pandemic hit. Despite the economic uncertainty caused by COVID-19, the home-sharing company will be going forward with its initial public offering (IPO), and Airbnb stock will start trading on the stock market.
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The details of the Airbnb IPO had been the subject of speculation for a while. Here is what we know so far:
Airbnb IPO Date
On August 19, 2020, Airbnb officially declared its intention to go public by unveiling its confidential IPO paperwork to the Securities and Exchange Commission (SEC). It’s now official that the Airbnb stock will be publicly available on December 10, 2020, on the NASDAQ stock exchange. It will be under the ticker symbol ABNB.
Airbnb IPO Price
One of the crucial pieces of information for investors looking to buy Airbnb stock is the IPO prices of the Airbnb shares. The home-sharing giant was previously planning to sell shares at a range of $44 to $50 per share when it makes its market debut.
However, according to a Securities and Exchange Commission filing, Airbnb increased its IPO price range to $56 to $60 a share. This means that the Airbnb stock price range has been increased by 20% at the top end and 27% at the bottom end. The new Airbnb IPO price range was set after Airbnb gauged initial demand from potential investors.
Airbnb intends to raise over $3 billion by selling over 50 million shares via its initial public offering. This will put Airbnb among the biggest IPOs of the year. It would give it a diluted valuation of $42 billion. The most recent private valuation of the company in the early weeks of the COVID-19 pandemic (April) was $18 billion.
The company’s value had fallen substantially due to the effects of the COVID-19 pandemic on the travel industry. In 2017, Airbnb had been valued at about $31 billion.
Why Is Airbnb Going Public Now?
Airbnb has suffered a lot of damage due to the effects of the pandemic on the travel industry. The company’s revenues as of September 30, 2020, had plunged by 32%. For the company to cut costs, it had to lay off 25% of its staff, reduce its sales and marketing budget, and lower executive salaries.
In April, Airbnb also raised $2 billion in 2 rounds of debt financing to be able to fund its operations. So, why is Airbnb going public in the middle of the global pandemic?
Although the pandemic adversely affected Airbnb’s business and brought huge losses, a business repositioning might have been its most important move. While the pandemic initially hurt the demand for Airbnb properties, demand has rebounded.
As international air travel was halted, the company began to cater to people who were interested in domestic travel and those who were working remotely but looking to change scenery. As a result, Airbnb’s business began to pick up again. From June 2020 onwards, booking rates surpassed expectations. The company has rebounded from COVID-19 better than its competitors.
Another reason that could have motivated Airbnb to go public despite being hit hard by the financial effects of the coronavirus pandemic recently is the internal pressure from employees. This is because Airbnb stock options that were offered to employees will be expiring this year.
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How Could Airbnb Stock IPO Impact Airbnb Hosts?
Will the Airbnb stock have any effect on hosts and real estate investors?
Generally speaking, those who will be most affected by the Airbnb stock initial public offering are existing investors, insiders, and Airbnb backers. This is because they will now have the opportunity to sell their shares to the public if they want as well as exercise stock options.
As for private investors, they will be able to buy Airbnb stock for the first time. However, buying Airbnb stock in the IPO can be tricky for retail investors. They may have to wait until Airbnb stock starts trading on the public stock market at the prevailing price. This price will depend on supply and demand.
IPOs typically have little impact on the entity’s customers. Nevertheless, it might be possible in some situations, particularly when those customers actively contribute to the growth of the company. Upon going public, they can be given cash bonuses and also allowed to buy shares at the IPO price if they want to. Perhaps Airbnb could do such a thing for Airbnb investment property owners.
In 2019, Brian Chesky, the co-founder and CEO of Airbnb, said that they would like the most loyal Airbnb hosts to be shareholders. With many Airbnb hosts having lost a lot of income during this pandemic, this is likely to happen.
The Bottom Line
Generally, there has been an initial public offering (IPO) surge in 2020 that has defied the economic uncertainty brought by the coronavirus pandemic. The much-anticipated Airbnb IPO is set to launch on December 10, 2020, after a lot of speculation. If you are looking to buy Airbnb stock, you should look closely at its performance as trading gets underway.
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