Airbnb doubles in US market debut, gaining elite status

NEW YORK (CNA) – Airbnb shares more than doubled in a sizzling United States (US) market debut which vaulted the home-sharing platform into an elite group of richly valued companies.

Shares opened at USD146, a dizzying rise after the San Francisco-based firm priced them at USD68 for its initial public offering. They closed at USD144.71, a jump of 113 per cent in the market debut.

At those levels Airbnb is worth more than USD100 billion, including options and restricted shares, up from the bumped-up USD47 billion at the IPO price.

That puts the 13-year-old company on par with major global firms such as IBM, 3M and American Express, for example.

Airbnb raised some USD3.4 billion in the offering amid a feverish rush for new shares in companies adapting to lifestyle changes imposed by the coronavirus pandemic.

The company listed on the Nasdaq stock exchange under the ticker symbol “ABNB”.

Gregori Volokhine, portfolio manager at Meeschaert Financial Services, said interest in Airbnb was high because “investors have the impression that this is the birth of a new platform, a company that can completely disrupt the world of tourism”.

Airbnb CEO Brian Chesky is shown on an electronic screen at the Nasdaq MarketSite in New York. PHOTO: AP

The Airbnb debut comes just a day after meal delivery group DoorDash’s spectacular Wall Street entry with a jump of 75 per cent in its first day of trading.

DoorDash made its debut with a lofty USD39 billion valuation, on the heels of IPOs from others in the tech sector and on-demand economy which point to frenzied demand for the stocks.

Airbnb has said its home-sharing model proved resilient during the global pandemic, as it posted a profit of USD219 million for the just-ended quarter.

The 13-year-old company, valued at USD31 billion in its latest private funding round, is confident it will thrive over time.

“We believe that as the world recovers from this pandemic, Airbnb will be a vital source of economic empowerment for millions of people,” it said in its IPO filing.

Airbnb recently implemented new safety protocols for many of its hosts and maintains that listings meeting its upgraded guidelines are safer than hotels during the pandemic.

The platform now has more than four million listings in countries around the world and has served more than 825 million bookings.

New Constructs research firm said Airbnb “has a plausible path to profitability and growth” if it can contain costs while expanding its global footprint.

Airbnb and DoorDash stock market debuts this week are part of a “unicorn parade” capping a busy year for hot startups going public.

Unicorn start-ups – valued in the billions – are poised to take advantage of a market hungry for young businesses promising fast growth, with some capitalising on lifestyle changes due to the coronavirus pandemic.

There have been 420 IPOs on US markets so far this year, some 88 per cent more that at this point a year earlier, according to Snowflake, a cloud storage computing firm which listed earlier this year, has seen its valuation surge to over USD100 billion in what some analysts say is a sign of a new tech bubble.

A key question is whether these emerging firms represent the future or are just a flash in the pan.

Some analysts say the pandemic has distorted the economy and that it’s too soon to know how the firms will fare.