Shares of Airbnb Inc more than doubled in their stock market debut on Thursday, valuing the home rental firm at just over $100 billion in the biggest U.S. initial public offering (IPO) of 2020 and capping a bumper year in which investors flocked to tech stocks.
Airbnb opened at $146 on the Nasdaq, far above the IPO price of $68 per share that raised $3.5 billion for the company. The stock hit a high of $165 and closed at $144.71.
The IPO is the culmination of a stunning recovery in Airbnb’s fortunes after the firm’s business was heavily damaged by the COVID-19 pandemic earlier this year.
But as lockdowns eased, more travelers opted to book homes instead of hotels, helping Airbnb post a surprise profit for the third quarter. The San Francisco-based firm also gained from increased interest in renting homes away from major cities.
”I don’t think this summer too many people expected to see an Airbnb IPO this year,” Airbnb Chief Executive Brian Chesky told Reuters in an interview.
”We were planning on going public, we put our IPO on hold and this has been the most unbelievable journey. It’s been quite a comeback for our hosts and for what I hope will be travel,” added Chesky, whose Airbnb stake is now worth around $11 billion.
Founded in 2008 as a website to take bookings for rooms during conferences, Airbnb’s listing was one of the most anticipated U.S. IPOs of 2020, which has already been a record year for stock market listings.
Record label Warner Music Group, data analytics firm Palantir Technologies and data warehouse company Snowflake Inc have all gone public in the past few months.
At the start of trading on the Nasdaq, Airbnb had a market capitalization of $86.5 billion, eclipsing that of online travel agency Booking Holdings Inc and hotel chain Marriott International Inc.
Including securities such as options and restricted stock units, Airbnb’s fully diluted valuation came to $100.7 billion, more than five times the $18 billion Airbnb was valued at in a private fundraising round in April at the outset of the pandemic. Airbnb’s worth was pegged at $31 billion in its last pre-COVID-19 private fundraising in 2017.
The eye-popping rise in Airbnb’s stock on its debut comes just a day after the share price of food delivery company DoorDash Inc doubled in their first day of trading.
Such large first-day trading gains are likely to fuel criticism from some venture capital investors, including Benchmark’s Bill Gurley, who argue investment banks underprice IPOs so their investor clients can score large gains when the stock starts trading. Such advocates have pushed for companies to consider listing shares through a direct listing, in which bankers have little influence on the price at which stock is sold.
Chesky said Airbnb would focus on the things that were within the company’s control.
”At this point the price of stock is not something we control. I’ve encouraged our employees to focus on things they can control,” Chesky said, speaking before the stock had started trading.