When house sharing unicorn Airbnb initially launched in 2008, it was a simple online booking platform with airbeds and empty spaces targeted at those who travelled into San Francisco for tech conferences and couldn’t afford the massively surged hotel prices. By March 2009, it evolved into more property types, from houses to apartments. Then, came seed investment from Sequoia Capital, and by 2011, Airbnb opened an office in London, its first international HQ.
Just yesterday, Airbnb had its public debut on Nasdaq, where retail investors ate up the market frenzy and within the day’s end, saw shares skyrocket by 118%.
It’s a story made for the headlines; an online travel platform which has taken brutal hits due to the pandemic, resulting in two quarters of losses, is seeing heightened demand for its IPO.
Airbnb’s stock frenzy comes hot at the heels of another tech company that went public this week; food delivery platform DoorDash, who ended the day at $72 billion valuation. This is insane, mostly because DoorDash reported a loss of $149 million when it filed to go public. DoorDash’s latest private valuation was $16 billion.
DoorDash shares have surged to $186 per share, up 82% from the food delivery app’s initial pricing of $102 a share, making billionaires out of its 20-30 something Asian American co-founders and CEO Tony Xu.
Main Bites
Airbnb has just
debuted on Nasdaq, with shares surging over 118% at closing on its first day. The shares closed their first day of trading at $144.71, implying a valuation of around $100 billion.
This is insane. Why? The implied valuation would make Airbnb more valuable than other online travel platforms (not strange), and more valuable than hotels such as Marriot and Hilton, combined (crazy!)
Now, bear in mind we’re just talking valuation.
In 2017, Airbnb was worth $31 billion in a private financing round.
The context
Before its mega IPO, Airbnb has been plotting to go public for quite some time, having launched 11 years ago (that’s like, forever in the startup space).
This year though, the platform was massively hit by the pandemic and subsequently, travel restrictions. Its CEO, Brian Chesky penned a letter explaining he had to lay off 25% of staff, about 1,900 people to save costs. It also had two unprofitable quarters, but investors are optimistic about change.
Clearly, there’s optimism over Airbnb’s long-term prospects and generally bullishness on the tech sector going forward. DoorDash also saw its shares surge 85% after its first trading day this week.
Zooming out
According to tech publication,
The Information, the price surge was in part due to the lack of available shares to trade.
Between shares sold in the IPO and shares that employees could sell, only about one-tenth of the company’s total shares were in circulation Thursday. Investment firm Fidelity reported it had eight times more buy orders than sell orders.
Zooming out, the appetite for Airbnb’s stock and clearly, business is there and bigger than ever (despite no one being allowed to venture out much, pre vaccine). The market is definitely in a frenzy. Airbnb’s real test now, is to thrive as a public company from 2021 onwards.
