New York: Airbnb Inc. and existing investors are seeking to raise as much as $2.6 billion in a long-awaited initial public offering expected to cap one of the busiest years ever for U.S. listings.
The home-rental platform and some shareholders are offering 51.9 million shares at $44 to $50 apiece, San Francisco-based Airbnb said in a filing Tuesday with the U.S. Securities and Exchange Commission.
The filing also addresses the key question of Airbnb’s valuation as a public company. It would have a fully diluted market value of nearly $35 billion at the top end of the indicative range. That figure includes employee stock options as well as restricted share units.
Airbnb’s highest valuation as a private company was $31 billion in a funding round in 2017. Warrants in an April round of debt and equity securities that included Silver Lake and Sixth Street Partners valued the company at only $18 billion, Bloomberg News has reported.
The company’s IPO valuation and price range could still change depending on demand for its stock on its roadshow with investors over the next week or so.
The company is currently planning to price its IPO on Dec. 9 and for its shares to begin trading on the Nasdaq Global Select Market the following day, said a person familiar with the matter, who asked not to be identified discussing private information. A representative for Airbnb declined to comment.
Busy December
December is expected to be a busy month for IPOs. Airbnb will join a group of companies planning listings including food delivery service DoorDash Inc., video-game company Roblox Corp., installment loans provider Affirm Holdings Inc. and ContextLogic Inc., the parent of online discount retailer Wish Inc.
Investors in Airbnb, along with its executives and directors, will be able to control the company through Class B shares, which will carry 20 votes each compared with one vote each for the Class A shares being sold. Airbnb’s backers include venture capital firm Sequoia, Founders Fund and DST Global.
At $2.6 billion, the IPO would be the fourth-biggest in the U.S. this year, according to data compiled by Bloomberg.
New listings on U.S. exchanges have raised $152 billion this year, with roughly half of that by special purpose acquisition companies, or SPACs, according to data compiled by Bloomberg. Globally, 2020’s total of $317 billion in IPOs is second only to 2007, when $385 billion was raised, the data show.
Travel recovery?
Potential investors in Airbnb will be trying to figure out how swiftly the global travel industry can recover. The coronavirus pandemic initially hit Airbnb hard but it bounced back quickly. Its gross booking value for the nine months ended Sept. 30 tumbled to $18 billion, down almost 40% from the same period last year, according to its filings.
Its bookings bottomed out in April, plummeting 72% from the previous year. It reduced marketing expenditures and cut its full-time employee headcount by about 25%. By June, bookings were down just 21% year-over-year.
A surge in people taking near-home vacations elevated the third quarter to Airbnb’s most profitable ever on the basis of earnings before interest, taxes, depreciation and amortization. It reported $501 million in income on an adjusted Ebitda basis, a big swing from the $400 million loss in the second quarter.
Airbnb’s rebound was driven almost entirely by domestic travel, or stays within a 50-mile radius of a traveler’s home. Pre-pandemic, domestic travel made up only 52% of Airbnb’s business. It’s now almost 80%. A key question for Airbnb — and it’s potential investors — will be how long can that last?
Airbnb’s revenue for the third quarter was $1.3 billion, down 18% from the same period in 2019. For the first nine months of the year, it had a net loss of $697 million on revenue of $2.5 billion, compared with a net loss of $323 million on revenue of $3.7 billion for the same period last year.
Morgan Stanley and Goldman Sachs Group Inc. are leading Airbnb’s offering. Allen & Co., Bank of America Corp., Barclays Plc and Citigroup Inc. are also listed as underwriters. It plans to trade under the symbol ABNB.
Also read: Airbnb’s fight to stay afloat after Covid is a case study in resilience