Airbnb on Tuesday disclosed it could raise as much as $2.5bn in its initial public offering, as it moves ahead with plans to list before Christmas, joining a crowded group of newcomers taking advantage of the record high in US stock markets.
The home-rentals business set the price range of its float at between $44 and $50 per share. Airbnb said it would sell as many as 55m shares, including a so-called “greenshoe” option to sell 5m more shares that could yield an additional $250m, taking its total proceeds before costs to $2.75bn. Existing investors will sell roughly 1.9m shares in the IPO.
At the top of the price range, the company would have a market value of $29.8bn, a feat considering its operations were moribund for part of this year after the pandemic and governments travel restrictions cut into its business, causing a collapse of bookings on its platform.
People briefed on the company’s listing process had said Airbnb had aimed for a valuation between $25bn and $30bn. Some investors purchased equity warrants valuing Airbnb at $18bn this year. Airbnb plans to list on the Nasdaq under the symbol ABNB.
The company’s ability to clinch the top end of its targeted valuation would underline the extent to which public investors are clamouring for fast-growing technology groups. Shares in companies in sectors such as business software and cloud computing have surged to new market highs.
Meanwhile, November has been one of the strongest months on record for US stocks, following double-digit monthly gains. Sentiment was boosted by Joe Biden’s win in the US presidential election and Covid-19 vaccine breakthroughs.
Airbnb will begin its roadshow this week, when it will attempt to convince investors that its business has rebounded from the depths of the coronavirus pandemic and still has room to grow further.
In a break from traditional IPOs, Airbnb will not consider bids for its shares unless investors specify a preferred price and quantity, according to people briefed on the process and a notice sent to potential investors. The process is similar to the kind used by the video game software company Unity in September.
Airbnb expects to use about $1.2bn of the proceeds from the offering to pay for tax and remittance charges on employee stock grants.
The San Francisco-based accommodation booking service recorded losses of nearly $700m on revenues of $2.5bn in the first nine months this year, widening from losses of $323m in the same period last year. In the second quarter, Airbnb suffered a $576m loss as the travel industry collapsed. However, the company swung to a profit of $219m in the third quarter, as the summer pushed people, and particularly remote workers, to retreat to nearby places outside urban areas.
The meal delivery company DoorDash on Monday also began to pitch investors on its IPO, seeking a market capitalisation as large as $27bn. The company would raise more than $2.8bn if it priced its shares at the top end of its expected range.
Investors valued DoorDash at about $16bn in June as its business surged from a rise in takeout meal orders during lockdowns, pushing it to a surprise profit in the second quarter. Like Airbnb, DoorDash also plans to price its IPO in an auction-like process, said people briefed on the offering.
Airbnb and DoorDash are headlining a busy end-of-year period for new listings in the US, with the video gaming platform Roblox and ecommerce site Wish also looking to go public in December.
Corporate issuers have raised proceeds of almost $70bn in US-based IPOs this year, according to the data provider Refinitiv. That is the most in any year since 2014, when Alibaba set the record for the largest IPO.
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