is leaning toward setting a price for its shares of $67 or $68 apiece, according to people familiar with the matter, in the latest sign of exuberance in the IPO market.
Assuming that is where the price lands, it would far exceed the target range of $56 to $60 a share the company established earlier this week, boosting an earlier range as investors clamor for the stock in the midst of a historic boom in IPOs. Shares of the San Francisco home-rental startup are set to begin trading Thursday.
The expected pricing indicates Airbnb would be valued at about $47 billion based on a fully diluted share count and including proceeds of the offering, which is set to raise about $3.7 billion.
In a sign of the strength of the IPO market,
stock soared in its debut Wednesday, with the San Francisco food-delivery company’s shares closing up 86% over an IPO price that also exceeded earlier expectations.
When Airbnb started its investor roadshow last week, the company established an initial per-share target range of $44 to $50. But it soon became clear that was too low.
Both Airbnb and DoorDash are making a debut as the IPO market shatters records, helped by the stellar performance of recent technology listings. So far in 2020, well over $140 billion has been raised on U.S. exchanges, far exceeding the full-year record of $107 billion set at the height of the dot-com boom in 1999, according to Dealogic data that date to 1995.
The Airbnb IPO marks a key milestone in the company’s turnaround during a tumultuous year in its history.
Airbnb had planned to make its widely anticipated debut earlier this year, but then the pandemic hit, hammering bookings in Asia, Europe and the U.S.
pivoted to raise capital to keep the business afloat, laid off a quarter of staff and shed noncore operations. Business improved in the third quarter because of the combination of deep cost cuts and an unanticipated pickup in local stays. The company posted a profit of $219 million in the period.
The Covid-19 pandemic continues to be Airbnb’s biggest near-term challenge. Investors must also contend with risk factors such as cities’ weighing zoning restrictions on short-term rentals and Airbnb’s difficulties policing crime and promoting safety on its platform—a matter that is expected to draw more scrutiny as it becomes a public company. Airbnb is also one of the few Silicon Valley startups with a presence in China, though the U.S. and Europe continue to be its biggest markets.
December is typically a quiet time in the IPO market. This year there will instead be a flurry of offerings. In addition to Airbnb and DoorDash, videogame company Roblox Corp. and the parent of online retailer Wish, ContextLogic Inc., are planning debuts before the year is through.
Goldman Sachs Group Inc.
are leading Airbnb’s IPO. Morgan Stanley will be the “stabilization agent,” which can intervene to steady trading in the company’s stock by buying shares. The shares are set to begin trading on the
Nasdaq Stock Market
under the symbol ABNB.
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