Airbnb on Wednesday priced its shares for its long-awaited initial public offering at $68 per share, above its expected range of $56 to $60, for a $47 billion valuation. It was set to debut on the Nasdaq exchange Dec. 10, and reports Thursday morning suggested that the stock price could more than double to more than $150 per share once trading begins.
[Update, Dec. 10, 4:45 pm EST] Airbnb’s stock began trading Thursday afternoon and at market close was trading at $144.71 per share.
Regardless of how the stock performs on its first day, the valuation represents an incredible comeback from the spring, when Airbnb raised $2 billion in additional cash and saw its valuation lowered from a high of $31 billion in 2017 to $18 billion in April during the depths of the coronavirus pandemic.
In May, Airbnb laid off nearly 1,900 employees, or about 25 percent of its workforce, reduced salaries and cut expenses. At that time, Airbnb CEO Brian Chesky wrote on the company's website: "We don't know exactly when travel will return. When travel does return, it will look different."
Since then, the company began to focus on longer-term stays—which already were a large part of the bookings for the Airbnb for Work business travel division. In addition, as leisure travelers started to hit the road again over the summer, many opted for short-term rentals like Airbnb instead of traditional hotels, allowing the former to bounce back faster than the latter. Reasons vary for the rental preference but include a desire for lodging located in more remote locations, full kitchens to control food preparation, outdoor space for social distancing, and fewer people around, allowing for a lower risk of contracting Covid-19.
A study conducted by STR and AirDNA released in August assessed 27 markets and found that from Jan. 1, 2019, through June 27, 2020, hotel revenue per available room was 64.8 percent lower year over year, while short-term rental RevPAR was down just 4.5 percent.
Still, it's unclear how corporations will take to Airbnb and other apartment-style accommodations once business travel recovers. In a recent survey conducted by BTN for its State of the Industry report, only about 6 percent of travel buyer respondents said that Airbnb and alternative accommodations were more important now than prior to the pandemic. Nearly 10 percent, however, said they were less important now.
Further, the apartment-style rental industry has continued to have its challenges since the pandemic started. Stay Alfred shuttered, Lyric left the space, and Domio saw its founders resign and is under a "financial re-engineering."
Airbnb, however, after a second-quarter loss of $575.6 million, turned a profit of $219.3 million in the third quarter. With its IPO, the company is set to raise about $3.7 billion, making it the largest U.S. IPO this year.