Airbnb’s IPO trades above IPO target

According to sources familiar with the matter at hand, Airbnb Inc’s sale of shares during its initial public offering (IPO) sold at $68 apiece, above its targeted price range, and raised around $3.5 billion, giving it a diluted valuation of $47.3 billion, including securities and restricted stock units.

The company had planned on selling around 51 million shares in the range of $56 to $60 apiece, having raised this range from an earlier target of $44 to $50 per share.

The IPO is the biggest by a U.S. operating company this year, which has been rather active for U.S. listings, with tech companies including Snowflake Inc and DoorDash Inc tapping the market for funds.

Airbnb’s IPO marks a dramatic comeback for the company following a sharp drop in bookings and an increase in cancellations following the outbreak of the coronavirus-induced pandemic across the globe nine months ago, forcing governments to impose travels bans and mandate social distancing guidelines.

Earlier this year in April, Airbnb raised $1 billion from private equity firms Silver Lake partners and Sixth Street Partners as it tried to boost its cash reserves midst declining revenues. During this fund raiser, the company was valued Airbnb at $18 billion, below its $26 billion valuation in early March before the pandemic began, said source.

As part of its efforts to reduce cash burn, Airbnb launched a host of cost-cutting measures, including suspending marketing activities, pausing hiring, slashing executive pay, in an effort to save up to $800 million this year.

With an easing of travel restrictions, and with more travelers opting to book homes rather than stay in hotels, Airbnb’s revenue surged following a slump in the third quarter which touched $1.34 billion. It posted a profit of $219.3 million, down from $266.7 million from the previous year.

Airbnb’s shares are scheduled to start trading today on Nasdaq under the ticker “ABNB.”

Morgan Stanley and Goldman Sachs were the lead underwriters for Airbnb’s offering.

Categories: Creativity, Entrepreneurship, HR & Organization, Strategy

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