Today, the world watched as Airbnb Inc. made its grand debut on the Nasdaq during a time when travel, the beating heart of the company’s business, stood at a global standstill.
Despite the fact that the coronavirus pandemic grounded planes, closed borders, and curbed tourism in nearly every country, the home-rental company soldiered on with its plans to IPO in 2020. It began its campaign to investors last week—eventually pricing shares well above its range at $68 a piece—and quickly became one of the most highly anticipated public offerings of the season.
But Airbnb’s big day appeared to exceed all expectations—even those of CEO and cofounder Brian Chesky. The company’s stock skyrocketed to $146 on open, a development that more than doubled its valuation and left Chesky speechless during an interview with Bloomberg TV.
Chesky, who was live when he was told that the stock had doubled in premarket trading, stumbled when asked to comment.
“That’s the first time I’ve heard that number,” he told Bloomberg. “In April we raised money . . . It was a debt financing . . . That price would have priced us around 30 bucks. So I don’t know what else to say . . . I’m very humbled by it . . . The higher the stock price, the higher the expectations.”
In midday trading, the stock price was hovering at around $156 a share.
Powered by hype, Airbnb had rolled out the red carpet for the occasion with a variety of feel-good marketing events: It broadcast a virtual “bell-ringing” ceremony featuring hosts in every time zone ringing their home doorbells. It leased the Barclays billboard in New York City’s Times Square to display a message thanking healthcare workers for their service. It donated part of its space on the Nasdaq tower to Fridays for Future, an organization started by Greta Thunberg to fight climate change.
But some investors still aren’t sure how good to feel about the company’s prospects. Airbnb is coming off a rough year of deep cost cuts in the wake of the pandemic, which resulted in shedding a quarter of its staff. Chesky was forced to start raising capital to keep the business afloat. However, it was majorly buoyed by news this month that multiple vaccines are nearing distribution, and seems to be banking on a tsunami of travel once the pandemic recedes. Whether that bet pays off remains to be seen. (The higher the expectations, indeed.)
According to Airbnb’s IPO prospectus, the San Francisco-based company works with more than four million hosts, who have welcomed 825 million guests in 220 countries, earning over $110 billion in rent.
The company itself profited $219 million between July and September due to a surge in local rentals, although it’s still at a net loss of $697 million for the first nine months of the year. Since its founding in 2007, it has yet to turn an annual profit.