Richmond Times-Dispatch

Airbnb shares more than double in price in long-awaited IPO

Home-sharing company’s value soars past $100B

- BY DEE-ANN DURBIN

Airbnb proved its resilience in a year that has upended global travel. Now it needs to prove to investors that it sees more growth ahead.

The San Franciscob­ased home sharing company made a triumphant debut on the public market Thursday. Its shares closed at $144.71 apiece, more than double the $68 price that Airbnb had set. The closing price gave the company a valuation of just over $100 billion. The shares are trading on the Nasdaq Stock Market under the symbol “ABNB.”

Instead of the traditiona­l ringing of the bell prior to the trading day, Airbnb presented a video of Airbnb hosts from around the world ringing their doorbells. In a video message, CEO Brian Chesky also thanked the millions of guests who have stayed at its listings. In 2019 alone, 54 million guests stayed at an Airbnb.

“You gave us hope that the idea of strangers staying together, in each others’ homes, was not so crazy after all,” Chesky said. “Airbnb is rooted in the fundamenta­l idea that people are good and we’re in this together.”

Airbnb raised $3.7 billion in its offering, making it the biggest U.S. IPO this year, according to Renaissanc­e Capital, which tracks IPOs. The company had initially set a price range of $44 to $50 for it shares, but raised that to a range of $56 to $60 earlier this week indicating rising investor demand.

Airbnb’s listing comes a day after another San Francisco-based company, DoorDash, soared through it initial public offering, the second largest after Airbnb’s. DoorDash’s stock jumped 85.8% to close at $189.51. The meal delivery app raised $3.4 billion with its offering.

Airbnb wants to add more hosts and properties, expand in markets like India, China and Latin America and attract new guests.

First, it will need to recover. Airbnb — which has never posted an annual profit — said its revenue fell 32% to $2.5 billion in the first nine months of this year as the coronaviru­s forced travelers to cancel their plans. The company delayed its IPO — initially planned for the spring — and funded operations with $2 billion in loans. In May, Airbnb cut 1,900 employees— or 25% of its workforce — and halted programs not related to its core business, like movie production.

But in the months since, Airbnb’s business rebounded faster than hotels as travelers felt safer booking private homes away from crowded downtowns during the pandemic.

Airbnb said the number of nights and experience­s booked, which plummeted 72% in April compared to year-ago levels, were down 20% in September. Airbnb debuted experience­s — from cooking classes to surfing lessons — in 2016.

“I think travel demand is going to probably follow vaccinatio­ns and people’s confidence,” Chesky told The Associated Press in an interview. Demand may be spotty at first and will come back region by region and even country by country, Chesky said.

Travel itself may change post-pandemic, he said. Some people are already renting Airbnbs for months at a time, combining work and vacation. The company is also seeing more nearby travel as people just want to get away from their own homes.

But Chesky stresses that the desire to travel is “innate” and won’t go away.

“That’s just who we are as people,” he said.

Airbnb now has 7.4 million listings, from castles to treehouses, in 220 countries. They are operated by 4 million hosts. The company controls around 39% of the global short-term rental market, according to Euromonito­r. It’s the market leader in Europe but trails VRBO, a vacation rental company owned by Expedia, in North America.

It could also expand its offerings further into boutique hotels, as it signaled with its 2019 purchase of last-minute hotel room supplier Hotel Tonight.

Chesky said focusing on unique properties — along with great hosts and experience­s — will help the company win.

“Last year, 69% of our revenues were from repeat customers,” Chesky said.

Still, Airbnb acknowledg­es it will be difficult and expensive to attract new hosts and guests. Its revenue growth rate was already slowing in the years leading up to the pandemic.

“I do think the company will benefit from the pentup travel demand once the vaccine is widely distribute­d, but why would someone want to buy into a travel-related, unprofitab­le business with slowing growth?” said Scott Rostan, the CEO of Training the Street, which advises Wall Street analysts.

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