It’s a good time to be a tech company going public, as Airbnb found out this week. In fact, Bloomberg said that December “is on track to set an all-time record for money raised in IPOs in the US, capping off an already record year.” Airbnb is now the latest to reap these benefits.
2020 has been a stellar for tech companies both big and small, thanks mostly to COVID-19 and new trends like remote working. It’s the reason we see relatively unknown companies like Zoom reach sky-high heights during a time when most companies in other sectors are holding for dear life.
On Thursday, Airbnb went public, after having started as an idea between two friends that involved renting an air mattress in their apartment to strangers in 2007. Today, and with the company having officially gone public, the little dream these two had 13 years ago is now worth around $100 billion.
On Wednesday, one day before listing on Nasdaq, Airbnb stock was slated for a $68 sale price. On Thursday, its first official day of trading, stock value more than doubled, opening at $146 and closing the day at $144.71, up 113%. This follows two previous increases in stock price pre-listing, as The Telegraph notes.
“I don’t know what else to say,” Airbnb CEO Brian Chesky said in an interview with Bloomberg Television, ahead of the listing while stock value was shooting up. “I’m very humbled by it.”
With a market valuation hovering around $90 billion on early Friday, the company’s IPO has been a roaring success, making it the most valuable travel company in the world.
“By comparison, hotel operators InterContinental, Marriott and Hilton all have smaller market caps at less than $43 billion,” CNBC said. “Airbnb is also larger than travel booking site Expedia, and roughly equivalent to Booking’s more than $86 billion market cap.”
Overall, faith in Airbnb has been solid, as the numbers have told so far.
“We’ve seen how resilient this business model is and we’ve seen the company stare into the abyss of a pandemic that shut down global travel and figure their way out of it,” Alfred Lin, a Sequoia Capital partner who sits on the board of Airbnb, told Bloomberg.
Airbnb’s IPO success is by no means a mere stroke of luck. The company has been smart about adapting to the pandemic, while most hospitality companies across the world were floundering.
“In the third quarter [of 2020], Airbnb’s revenue declined only 18%, compared to the near 60% decline for Expedia and Marriott International Inc.,” Bloomberg said. “The three-month period was also Airbnb’s most profitable ever when adjusted for earnings before interest, taxes, depreciation and amortization.”
The company began seeing renewed interest and demand for bookings around summer this year, at least in the US, as people decided to turn their attention inwards for their next vacation: since people couldn’t travel abroad due to COVID restrictions, they began travelling within borders to more rural areas, which helped keep Airbnb’s business alive.
However, Airbnb has had to take some drastic action too. It raised $2 billion in debt to stay afloat during pandemic, amid cancellations and refunds. Additionally, the company had announced back in May that it would be laying off 25% of its staff, or nearly 1800 employees, as part of a restructuring plant that has cost them $137 million as of September 30th.