Airbnb aims for $35 billion valuation in long-awaited IPO

December 7th, 2020: Airbnb Inc, on Tuesday, said it is aiming for a valuation of up to $34.8 billion in its initial public offering (IPO), in what would cap a striking resurgence in its fortunes after the U.S. home rental firm's business was heavily damaged by the COVID-19 pandemic earlier this year. The company is currently planning to price its IPO on Dec. 9 under the symbol "ABNB" and its shares to begin trading on the Nasdaq Global Select Market.

Airbnb was launched by Chesky and Gebbia in 2008 as a website to take bookings for rooms during conferences, including the Democratic National Convention that year in Denver. Since then it has expanded listings to include apartments, houses and vacation rentals, allowing millions of ordinary homeowners to make money by renting their flats and houses while on their own vacations. The company achieved "unicorn" status in 2011, with listed properties in 13,000 cities across more than 180 countries at the time, after being valued at more than $1 billion in a funding round led by Andreessen Horowitz. It went through a rough patch due to the travel restrictions that followed the pandemic which led to laying off a quarter of its workforce and having to seek $2 billion in emergency funding from investors, including private equity firms like Silver Lake and Sixth Street Partners.

But as soon as lockdown eased, more travellers 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.

Of the shares being sold, Airbnb founders Brian Chesky's stake would be valued at about $3.8 billion while those of Gebbia and Blecharczyk would be worth about $3.5 billion each. Collective sales will be nearly $100 million worth of shares in the IPO launch. Sequoia Capital, which first invested in Airbnb in 2009, would have a stake worth more than $4 billion. The filing also addresses the key question of Airbnb’s valuation as a public company. It would have a fully diluted market value of nearly $35 billion at the top end of the indicative range. That figure is inclusive of employee stock options as well as restricted share units.

In a regulatory filing, Airbnb set a target price range of between $44 and $50 per share in order to sell 51.9 million shares, which would pull in $2.6 billion for the company. Airbnb could end up selling $2.85 billion at the upper end of the range. Warrants in an April round of debt and equity securities that included Silver Lake and Sixth Street Partners valued the company at only $18 billion. The company’s IPO valuation and price range could still change depending on demand for its stock on its roadshow with investors over the next week or so. Airbnb’s highest valuation as a private company was $31 billion in a funding round in 2017.

"Looking at Airbnb there's a lot to like. The company's third quarter has shown they've bounced back better than a lot of their travel rivals," said Matthew Kennedy, senior strategist at IPO research firm Renaissance Capital.

Airbnb's stock market debut will be one of the largest and most anticipated U.S. IPOs of 2020, which has already been a bumper year for flotations. The company’s reputed investors also include Hollywood actor Ashton Kutcher, buyout firms General Atlantic, TPG, Hillhouse Capital and investment management firms Vanguard Group and Fidelity Investments.