Airbnb seeks $47 billion valuation, costs shares at $68 in IPO

Brian Chesky, Chairman and Co-Founder of Airbnb Inc., speaks during lunch at the Economic Club of New York on the New York Stock Exchange (NYSE) in New York, United States on Monday, March 13, 2017.

Michael Nagle | Bloomberg | Getty Images

Airbnb, the company that allows users to book short-term rentals and travel experiences, sold shares in its initial public offering for $ 68, which was above price according to people familiar with the matter.

Thursday’s offer valued the company at $ 47 billion at full dilution. The company previously announced it would sell shares between $ 56 and $ 60.

San Francisco-based Airbnb makes money by charging short-term rental managers or hosts and guests a service fee for bookings made through the company’s services.

Airbnb posted net income of $ 219 million on revenue of $ 1.34 billion for the last quarter. This represents a decrease of nearly 19% from last year’s revenue of $ 1.65 billion. While the company posted mostly net losses, it was able to see other quarters of profitability on occasion, including Q2 and Q3 of 2018 and Q3 of 2019.

For the full year of 2019, the company recorded a net loss of $ 674 million on sales of $ 4.81 billion. To date, the company has made a net loss of nearly $ 697 million in 2020 on sales of $ 2.52 billion. The decline is likely due to the impact of the Covid pandemic, which slowed leisure and business travel earlier this year. The pandemic has cost the travel industry an estimated $ 481 billion in lost revenue since early March, according to a December 3 report by the US Travel Association.

In April, shortly after the U.S. pandemic, the company took out $ 2 billion in new debt valued at $ 18 billion and announced major cost-cutting initiatives, including plans to increase 25% of its workforce or nearly 1,900 employees dismiss. The company also cut marketing costs and borrowed billions of dollars.

However, Airbnb bounced back after a surge in rents in rural areas as residents fled closed cities with funds. The recovery began within two months of the pandemic, the company said in its prospectus.

Airbnb is number 41 on the CNBC Disruptor 50 2020 list and the only startup to be included eight times on CNBC’s annual list.

Airbnb’s initial public offering follows that of DoorDash, which began trading on Wednesday. DoorDash’s share price rose 86% from its initial public offering of $ 102 to $ 189.51. The closing price on DoorDash was $ 60.2 billion.

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