Airbnb Filed IPO Paperwork

Airbnb Filed IPO Paperwork

over 3 years ago2 mins

It’s about to be a beautiful day in a whole new neighborhood for Airbnb: the vacation rental marketplace filed papers for its long-awaited initial public offering (IPO) this week 🏡

What does this mean?

The filing was confidential, so we won’t get to take a look at the company’s much-discussed financials for a while yet. But it goes without saying that the pandemic-driven collapse in vacation travel has hit the company hard: it shored up its finances in April by raising $1 billion, and let go of 25% of its staff a month later.

Source: Bloomberg
Source: Bloomberg

Now though, as travel starts to come back(ish) and staycations boom in popularity, Airbnb looks like it’s on surer footing – hence the IPO 📂 Its filing suggests the rental marketplace could “go public” by the end of the year, but there’s no detail on how many shares it’ll sell and at what price. And given that Airbnb went from a $31 billion valuation in 2017 to just $18 billion in April, those are the questions on every investor’s lips.

Source: The Wall Street Journal, AirDNA
Source: The Wall Street Journal, AirDNA

Why should I care?

Airbnb was reportedly considering a “direct listing”, which partly cuts investment banks out of the process and doesn’t actually raise any money from the sale of new shares. An IPO, on the other hand, typically sees banks “underwrite” and “stabilize” new shares, which means they buy up any unwanted ones to keep their price from falling too far 🏦 Given the still-uncertain future of travel, Airbnb might’ve opted for the latter so it’d have flexibility to raise more money if it needs to – as well as a safety net in case markets get volatile.

Just a heads up: the average day-one rise of a new stock in the US is 18%, but most of that benefits existing investors as new ones drive up the stock price 📈 What’s more, 60% of IPO stocks will be trading below their initial price five years down the line.

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