Airbnb, the home-sharing company, priced its shares at $68 apiece late Wednesday, ahead of its long-awaited initial public offering, which is set to raise about $3.7 billion. The well-timed IPO of the industry leader could be a hit, as per analysts.
Here's everything you need to know about this IPO:
-The San Francisco-based home-rental company unveiled paperwork to move ahead with plans to sell shares to the public last month and filed its preliminary prospectus with the SEC, to raise as much as $3.1 billion. Airbnb is looking to utilize proceeds on the offering to retire existing debt and to cover future investment needs.
-Earlier, the startup had established an initial per-share target range of $44 to $50, but then later decided to boost the proposed price range to $56 to $60 a share. Later, it settled the price for its share at $68 apiece. The new price range would give the company a valuation of about $47 billion on a fully diluted basis.
-Founded in 2008, the home-sharing giant Airbnb Inc. had planned to make its widely anticipated stock market debut earlier this year, but then delayed it as the travel industry was hurt badly by the coronavirus pandemic.
-Airbnb has grown into a global behemoth with 5.6 million listings in 100,000 cities in 220 countries and regions, with more than half of its revenue from outside the U.S.
-Instead of considering a direct listing, Airbnb has opted for a traditional IPO in which it will sell shares to raise capital. The three co-founders are selling about 1.9 million shares in the offering, bringing the total shares in the IPO to at least 51.9 million, commanding nearly 43% of Airbnb's voting power post the offering. The company has said it would allow its employees to sell up to 15% of their shares when it lists.
-Airbnb, which is edging towards profitability, was hurt badly in 2020, at the effect of COVID on gross bookings and cancellations due to shutdowns and restrictions around the world. But, business returned stronger than most had anticipated in 2020, with third-quarter numbers coming in above expectations.
-Covid-19 pandemic continues to be Airbnb's biggest near-term challenge. Airbnb reported an after-tax profit of $219 million in the third quarter, compared with a loss of $576 million in the second quarter. Revenue in the three months that ended June 30 dropped 72% YoY, although fell just 18% YoY during three months ending Sept. 30. Airbnb's accumulated losses since its 2008 founding totaled $2.1 billion through September 30. The company's revenue fell 32 percent to $2.5 billion in the first nine months of this year. It reported a loss of $697 million through the first nine months of this year, largely because of shrinking revenue earlier due to COVID 19. Airbnb's accumulated losses since its 2008 founding totaled $2.1 billion through September 30.
-Airbnb said it has a substantial market opportunity in the growing travel market and experience economy. It has expanded its estimate of market potential to $3.4 trillion.
-As per market analysts, the hotel business is large, but the company's growth has slowed over the last five years. With its asset-light business model and global presence, the company is poised to benefit from a rebound in travel. The company's valuation looks reasonable given the company's market position, scarcity value, brand power, and global presence.
-The Silicon Valley startup faces competition from online travel operators Booking Holdings (ticker: BKNG) and Expedia Group (EXPE), and lodging leaders Marriott International (MAR) and Hilton Worldwide Holdings (HLT).
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