Airbnb Inc. (ABNB) - Get Report priced its initial public offering more than 50% higher than its original target, valuing the home rental platform at $47 billion, as the market's appetite for new tech shares sent DoorDash (DASH) - Get Report soaring on their NYSE debut amid a year-end rush to raise equity capital.
Airbnb offered around 52 million shares for sale at a final price of $68 each, well ahead of their December 1 target of between $44 and $50 each and the biggest IPO of the year for a U.S. company. The shares will begin trading later this morning on the Nasdaq under the ticker symbol ABNB and the San Francisco, California-based group will raise around $3.4 billion from the offering.
Around $800 billion in new IPOs have hit the market this year, including Snowflake SNOW, Palantir Technologies PLTR and Asana ASAN, with online trading platform Robinhood waiting in the wings, putting a heavy strain on investment funds as they take down new shares in an ever-rising market.
Early investors in Airbnb, howeer, may be hoping to catch lightening in a bottle again Thursday after yesterday's 80% surge for DoorDash, which priced its IPO at $102 a share, only to see the first trade registered on the New York Stock Exchange at $182 per share. The stock rose further still, to 195.50 each, a level that valued the biggest U.S. restaurant delivery group at around $71 billion while the broader Nasdaq Composite snapped a four-day wining streak and fell 1.94%.
"There's a reason I'm always warning about the dangers of big IPOs to the market," TheStreet's founder, Jim Cramer, said last night on CNBC's Mad Money program. "Did buyers simply by DoorDash at the open using market orders, forcing them to sell something else to pay for it when the price came in higher than expected? We could see the same thing (Thursday) with AirBnb."
I don't think this will slam the bull market, even if it weighs us down for a few days," Cramer added. "It's true that people using market orders took DoorDash to levels that were far higher than they thought; with a market order, you never know what price you're going to get. That's why I always tell people to use limit orders, where the transaction won't go through if it passes a level you're comfortable with."
DoorDash shares were marked 7% lower in early trading Thursday to change hands at $176.43 each
Airbnb's IPO success marks a remarkable recovery for the group, which was hammered by the coronavirus pandemic earlier this year, as well as the restrictions on travel and rentals imposed by state and federal governments around the world.
The group estimates a global market of around $3.4 trillion, including $1.8 trillion of short-term rentals. It carries around 7 million listings from 4 million hosts and reported around $38 billion in total bookings last year.
Airbnb said it lost $697 million over the first nine months of this year, with revenues down 32.4% to $2.5 billion as it slashed staff and took out $2 billion in term loans last spring as the first wave of the pandemic took hold.
September quarter revenues, however, jumped to $1.3 billion, still down 18% from last year but a notable improvement as travel restrictions eased amid the summer holiday season.
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