Airbnb’s Blockbuster IPO
Airbnb’s First Trading Day
Airbnb (ABNB) has finally made its much anticipated public debut. 2020 has been tumultuous for the home rental startup, but the company is now ending the year on a high note. As Airbnb began its investor roadshow last week, it established a target range of $44 to $50 per share—but executives soon realized this was too low.
On Wednesday night shares were priced at $68 each. By the end of the trading day today they were up over 112% closing at $144.71 per share.
Capping off a Tumultuous Year
Airbnb initially planned to go public in the spring, but when the pandemic set in across the world, Airbnb’s bookings and revenue tumbled. In April the company raised $1 billion in debt from private equity firms Silver Lake and Sixth Street Partners. It also laid off 25% of its workforce and cut executive pay to weather the storm.
As the pandemic went on Airbnb made a remarkable comeback. People looking for more space to work, study, and quarantine at home turned to the platform to rent homes for long-term stays, not just vacations. The company’s revenue rebounded in the third quarter to hit $1.34 billion. Airbnb also managed to earn a profit of $219.3 million during the third quarter, which is down from $266.7 during the same period a year earlier but is still impressive given the circumstances.
A Record Breaking Year for IPOs
Though December tends to be a slow time for the IPO market, this year some companies are rushing to go public before the end of 2020. DoorDash made its public debut on Wednesday and smashed expectations, closing up 86% after its first trading day. Video game company Roblox and ContextLogic Inc., parent company of ecommerce platform Wish, are also planning IPOs later this month.
Already in 2020 there has been $140 billion raised on US exchanges, and that number will likely be higher by the year’s end. This is well above the record of $107 billion set during the 1999 dot-com boom. Just like Airbnb, the IPO market suffered at the onset of the pandemic, but it is ending a volatile year with a bang.
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