Airbnb has increased the offer price of its shares to between US$56-US$60 a pop ahead of its planned initial public offering (IPO) on the Nasdaq exchange on Thursday.
The higher offer price, which was raised from its previous level US$44-US$50 per share overnight on Monday, means the company could raise as much as US$3.4bn ahead of the float, which in turn would see the whole firm valued at around US$42bn.
This potential market cap is more than twice the US$18bn valuation the firm received in a private fundraising earlier this year as the pandemic hammered the travel industry and Airbnb’s legions of hosts. The crisis affected the company so badly that in April it was forced to tap investors for US$2bn in funds to stay afloat.
However, since then the company’s fortunes have been revived somewhat, with Airbnb reporting a quarterly net profit of US$219mln despite revenue sliding 18% to US$1.3bn in the three months to September 30.
While the firm surprised many on the market with its decision to IPO in what has been a bleak year for the sector, some analysts see a method behind the move.
“The fact that early Airbnb investors and employees have stock options which will expire early next year may have something to do with [the decision to flat], so will the onerous terms of the funding deal with its private equity partners. But it is fair to say that the company has rebounded from the crisis than many of its competitors”, said Susannah Streeter at Hargreaves Lansdown.
“Airbnb is a now a household name globally and its model can pivot quickly to satisfy the change in booking behaviour brought about by the pandemic. There has been a rise in staycations around the world, with smaller groups holidaying together switching from popular tourist spots to more isolated rural retreats. That trend could also help reduce the number of complaints from neighbours about rowdy revellers which has plagued the company in recent years, along with accusations that the platform limits the amount of housing available for locals. Those concerns have led to restrictions on how the company operates in some big cities around the world”, Streeter continued
“Airbnb still has plenty of challenges to grapple with, but its flexible model should give it room to manoeuvre in the hard hit travel sector compared to some of its rivals”, she concluded.
Airbnb’s decision to pursue its IPO, which is shaping up to be the largest float for a tech firm this year, follows other groups that are also seeking to list on the market to take advantage of the rush of optimism sparked by the news of coronavirus vaccines and hopes of an economic boom in the aftermath of the pandemic.
Last week, the US’s largest food delivery firm DoorDash also hiked its IPO offer price to between US$90-US$95 per share from a previous range of US$75-US$85 announced earlier that week. The company is aiming to raise around US$3.14bn through the offering, which would provide it with a market value of just over US$30bn.