Airbnb was founded in 2008 after Joe Gebbia grew a hustle renting an air mattress in his downtown apartment to a company with more than 4 million hosts and over 7.4 million listings of home rentals along with “experiences” like guided wine tours, mountaintop yoga and pottery classes. (The company has said it would allow its employees to sell up to 15% of their shares when it lists next month).
The price range of each share will be determined by the investment banks underwriting the offering (Morgan Stanley and Goldman Sachs Group ) after conferring with Airbnb to decide how many shares to offer. Airbnb has opted for a traditional IPO in which it will sell new shares to raise capital. The banks will give an initial allocation of shares to a mix of institutional investors, including mutual funds and hedge funds, and some individual investors, at a set price on the day before it starts trading on the Nasdaq exchange. Once Airbnb’s shares start trading, individual and institutional investors can buy the shares through a brokerage firm.
Airbnb is expected to garner a valuation of roughly $30 billion in its offering ( valued at $31 billion in a 2017). Airbnb’s valuation fell to $18 billion during the pandemic earlier this year (Revenue in the three months that ended June 30 dropped 72% from the year-earlier period.). However, business picked up in the three months ending Sept. 30, leading revenue to fall just 18% from the year-earlier period. The company posted a profit of $219 million over the period. The company plans to list on the Nasdaq Stock Market under the symbol ABNB.
The money raised can be used for various things, including investments, acquisitions and paying off the money Airbnb borrowed to navigate the health crisis earlier this year. Airbnb’s accumulated losses since its 2008 founding totaled $2.1 billion through Sept. 30.
Some early investors and employees, a handful of whom are set to lose their stock options next year, were applying pressure on the Mr. Chesky, the CEO, to take the company public so they could cash out.
Airbnb has a presence in China, though the U.S. and Europe continue to be its biggest markets. The company said a prolonged deterioration in U.S.-China relations could hurt its business.
“We need to ensure that our business practices in China are compliant with local laws and regulations, which may be interpreted and enforced in ways that are different from our interpretation,” Airbnb has said.