Could Airbnb Go Public in 2020?

Written by Jennifer Clark
Posted October 28, 2020

We started out in 2020 with a lot of optimism, especially with regard to the IPO market. There were several highly anticipated IPOs at the beginning of the year, and one of those was Airbnb’s. The San Francisco-based tech company and online vacation rental marketplace was set to go public but then the coronavirus hit the U.S. The pandemic significantly slowed down the IPO market until the summer when it started to pick back up. 

At that point, rumors began to circulate about how Airbnb was planning to go through with an IPO by the end of 2020. But considering they weren't much more than rumors, market watchers figured the IPO wouldn't happen this year. What we know right now is that Airbnb's board recently approved a two-for-one stock split for its privately held shares that became effective on Tuesday. 

That means the venture capitalists who already own shares will see them climb 10.4% after the split. Bloomberg reports:

Before the split, the shares were valued at $69.76 each as of Sept. 30 compared with $63.15 at the end of the previous period, according to the email. After the split, the company’s common shares were valued at $34.88 apiece as of Sept. 30, according to the email. 

There is speculation that an Airbnb IPO could occur in December and raise about $3 billion. Concerning the Airbnb split, a senior research analyst at Skift Research said: 

Maybe there is some issue with the number of shares outstanding and having more available makes it easier for the underwriters to divvy them up and allocate them to investors. Or maybe Airbnb anticipates a lot of participation from small retail investors and thinks a lower share price will make it more attractive for that class of investors to buy shares. 

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This two-for-one private stock split would make it easier for retail investors to participate in Airbnb’s IPO because that means shares would have a lower cost. The company also announced on Tuesday that it plans to list its shares on the Nasdaq. It filed confidentially for its IPO with U.S. regulators in August. There was some interest earlier in the year from billionaire investor William Ackman about going public through a reverse merger with his blank-check company, but Airbnb was more interested in going public the traditional way. 

Despite the market slowdown from the pandemic, the IPO market picked itself back up and has experienced some amazing gains in the second half of the year. According to IPOScoop, 175 IPOs have been priced so far this year and that includes 155 SPACs offerings. That's a busy year given the circumstances. The surge in the IPO market has given hope to a lot of different types of companies aiming to go public this year, which could be part of the reason Airbnb has decided to go public before the end of 2020.

The company may be waiting until the U.S. general election and any market uncertainty tied to it, but a December IPO for Airbnb wouldn't be so outlandish — especially since Airbnb has seen a rebound since the beginning of the year. The company said in July that customers had booked more than 1 million nights in a single day for the first time since March 3, which could be attributed to travelers staying away from larger hotels and opting for local vacation rentals.

A $3 billion IPO would be an excellent way to close 2020. 

Until next time, 

Jennifer Clark
Pro Trader Today
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