Airbnb (NASDAQ:ABNB) is getting set to go public on December 10, after pricing its initial public offering (IPO) on December 9. Earlier this week, it filed an updated S-1 with the US Securities and Exchange Commission (SEC). This outlines its hopes to price its newly minted shares between $44 and $50 each. This will give it a market capitalization of $35 billion, on a fully diluted basis, which marks a sensational recovery from just six months ago.
Airbnb is back in the game
At the turn of the year Airbnb was planning on going public with a big splash IPO, but then the pandemic hit, and all its best laid plans were destroyed. Airbnb’s bookings collapsed in an instant and within no time they were compensating hosts to the tune of $250 million to cover losses and keep them sweet.
A private valuation in 2017 set it at $31 billion. This year, Airbnb’s value lurched to $26 billion in March and a few weeks later had plunged to $18 billion. To be sailing into the sunset on a $35 billion IPO six months later is truly remarkable for a company operating in possibly the hardest hit Covid-19 sector.
Rewarding loyal investors
At IPO it hopes to raise around $2.75 billion. It will list on NASDAQ using the ticker ‘ABNB’ and existing investors hope to sell $96 million of their stock. Some of its earliest employees hold stock options that expire this year, so they’re looking forward to a windfall to brighten up a disheartening year. The public offering is being managed by big players including Citigroup, Goldman Sachs, and Morgan Stanley.
Hosts may also receive the chance to buy shares at IPO. The S1 filing states “up to 3,500,000 shares of Class A common stock, or 7.0% of the shares offered by us” are to be eligible for US hosts. Airbnb employees are not eligible.
The pandemic has caused some degree of loss for the company. Q3 revenues were down 19% year-on-year, but was still a recovery on earlier quarters. You can read more in our previous Airbnb articles. We covered the Airbnb IPO in detail in our August article and again in October with Airbnb’s design and diversification tactics.
Will Airbnb shares be available on Robinhood?
Robinhood investors love a shiny new stock, and Airbnb is sure to be right on their radar. So, will Robinhooder’s be able to buy Airbnb at IPO? Robinhood allows pre-IPO orders for a few stocks but can’t guarantee orders will be filled. With Airbnb being such a well-known brand, it may well be available, but if not, TradeStation customers can access the Airbnb IPO through the ClickIPO app (again no guarantees orders will be filled) and Webull customers can access the Airbnb IPO through the Webull app.
While it can be very exciting getting in at the IPO, it doesn’t always pay to be first. The Snowflake IPO earlier this year was sensational, but its share price dropped over the following ten days.
Airbnb IPO: key points for investors
- The business has over four million hosts registered.
- There will be no dividend on Airbnb stock.
- Q4 is likely to have fewer bookings than Q3.
- Domestic travel and short distance stays are less affected by the pandemic than international bookings.
- Airbnb incurred losses of $700 million on $2.5 billion of revenue during Q1 to Q3.
- It spent over $5.3 billion in 2019 and brought in $4.8 billion.
- There will be challenges ahead until international travel is reinstated and normality resumes.
- Airbnb is proving resilient and adaptable. It has diversification plans in the mix.
While home sharing is Airbnb’s bread and butter, it’s also building out other avenues to generate revenue.
- Experiences include booking tour guides, excursions, and local entertainment events.
- Venues for big events such as parties, wedding ceremonies, and dinner parties.
- Online Experiences, which include one-to-one tutorials with specialists in local knowledge, cuisine, sporting activities or educational lessons.
- Team building events and work-away-work-from-home.