Here’s everything you need to know about Airbnb’s upcoming Initial Public Offering, which is expected to take place in December.
Airbnb has revolutionized the way we travel; making it more affordable and giving consumers wider choice when it comes to choosing accommodation — and now they’re about to go public. The 12-year-old company has more rooms to rent than Marriott, the largest hotel chain in the world, and filed its IPO prospectus on November 16, 2020, although there is no set date for the IPO yet. It is expected we will be able to buy shares in early to mid-December 2020 when the company will trade its stock on the Nasdaq under the ticker ‘ABNB’.
Currently, there is no decided share price or a set number of offer shares. However, it is expected that the company will try to raise $3 billion through its IPO, bringing its total valuation to $30 billion.
When can I buy Airbnb stock?
Airbnb is expected to begin trading on Thursday, November 10, valued at around $30 billion, with shares expected to go for $44-$50.
The company had some great years prior to 2020. In 2019, Airbnb had a total revenue figure of $4.8 billion, a 32% year-over-year (YoY) increase. The company had a YoY revenue increase of 43% in 2018 and 71% in 2017. This impressive growth came crashing down once the pandemic hit, and in the first nine months of 2020, Airbnb brought in revenues of $2.5 billion compared to $3.7 billion in the first nine months of 2019.
Airbnb has handled the devastating impact of COVID well though, pivoting from its main business model to offering getaways that are within driving distance of people’s homes rather than in different countries. This has allowed Airbnb to recover from the disruption that bit quicker than traditional hotels. The company also has some long term bookings still active, and in total, 24% of its bookings are long-term stays of more than 28 days. Unfortunately, the lower demand from the pandemic has led to the company initiating severe cost-cutting measures, laying off 1,900 of its 7,500 employees.
Airbnb has an enormous potential market, with the world spending $4.7 trillion on travel in 2019 alone. In the company’s IPO prospectus, it claims to have a total addressable market of $3.4 trillion. This is made up of its short-term stays, long-term stays, and experiences, with respective addressable markets of $1.8 trillion, $210 billion, and $1.4 trillion. The company also mentions that its serviceable addressable market is $1.5 trillion in total. Airbnb has an impressive community and brand, which is globally recognized, and 5.6 million listings from 4 million hosts. Its guest community is engaged and retention is high with guests returning to book through Airbnb when they travel again, which gives it an extreme competitive advantage. When travel begins to return to normal, it is likely that we will see a huge increase in travel and, at the same time, people creating listings in an effort to secure some extra income. This creates a larger supply with a wider diversity of properties that somebody traveling can choose from.
Despite the pandemic, 2020 has been a good year for IPOs, with Snowflake and Palantir being two of the most-anticipated.
Snowflake, the company with the largest-ever software IPO, has stayed reasonably steady since going public. The company had initially expected to price shares between $75 and $85 a share, although the company went public at $120 with shares skyrocketing up to $300 by the end of the first day. The company doubled its market cap in a single day.
As for Palantir, the secretive money-losing data-mining firm, the stock opened at $10 per share, almost 40% above the reference price set by the company. Shares rose 14% within the first hour and then dipped. The company is currently trading at around a 90% gain from its IPO price, at the time of writing. These companies are both embedded in the deep-tech data industry; so it will be interesting to see how investors react towards a hospitality-related stock offering given the 2020 pandemic.
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