SAN FRANCISCO — During the last decade, Airbnb has upended the journey business, riled regulators, pissed off native communities and created a mini-economy of short-term rental operators, all whereas spinning a heat narrative of belonging and connection.
On Thursday, Airbnb bought buyers on an excellent unlikelier story: that it’s a pandemic winner.
The corporate’s shares skyrocketed on their first day of buying and selling, rising 113 % above the preliminary public providing worth of $68 to shut at $144.71. That put Airbnb’s market capitalization at $100.7 billion — the most important in its era of “unicorn” firms and greater than Expedia Group and Marriott Worldwide mixed.
Airbnb’s providing raised $3.5 billion, making it the largest I.P.O. this yr.
Only a day earlier, DoorDash, a meals supply start-up, additionally defied gravity by elevating $3.4 billion in its first day of buying and selling, when its share worth surged 86 % to a valuation of $68 billion. Each debuts adopted a string of different scorching I.P.O.s that collectively make 2020 the busiest yr for U.S. public choices since 1999, in line with Renaissance Capital, which tracks I.P.O.s.
The hair-bending choices this week have raised speak of a brand new inventory market bubble within the midst of a pandemic-induced downturn, as greater than 947,000 staff filed new claims for state unemployment advantages final week. With rates of interest low and monetary stimulus goosing elements of the economic system, buyers have chased ever-riskier bets, driving valuations of unprofitable start-ups to ranges that appear divorced from actuality. Robinhood, a inventory buying and selling app whose use has spiked within the pandemic, has additionally flooded the market with tens of millions of day merchants desperate to get a bit of brand-name tech firms.
James Gellert, chief government of Speedy Rankings, a supplier of economic evaluation, mentioned the “absurd” valuations represented “the acute exuberance and unprecedented liquidity available in the market.” He warned that sentiment might rapidly flip, bringing I.P.O. buyers “a participation hangover within the coming months.”
Brian Chesky, Airbnb’s chief government, mentioned in an interview that he felt a “groundswell of enthusiasm” whereas pitching Airbnb to buyers, however wouldn’t deal with the corporate’s short-term inventory actions.
“I can’t management the inventory worth, however I can management the story,” mentioned Mr. Chesky, 39, whose stake in Airbnb is now value $11.1 billion.
The exuberance is a pointy turnaround from final yr, when a lackluster I.P.O. from Uber and a failed I.P.O. try from the workplace firm WeWork humbled the tech business, resulting in warning and layoffs in the beginning of 2020. The dismay intensified with the onset of the pandemic, with many start-ups reducing again in anticipation of a slowdown.
However over the summer season, the tech business surged and the inventory market got here roaring again. A wave of tech I.P.O.s delivered gushers of money to Silicon Valley start-ups, their buyers, founders and workers. Airbnb’s valuation now tops Uber’s and approaches the extent of Fb’s at its I.P.O. in 2012. The e-commerce start-up Want, the sport maker Roblox and the home-buying firm OpenDoor additionally plan to go public this month.
Not like the opposite start-ups, which have seen demand for his or her merchandise soar within the pandemic, Airbnb spent a lot of the yr reeling as individuals canceled their bookings. Within the first 9 months, Airbnb introduced in $2.5 billion in income, down from $3.7 billion a yr earlier. It misplaced $697 million throughout that point, greater than double final yr.
In April, it raised emergency funding, closed sure aspect tasks and shelved its I.P.O. plans. In Could, the corporate laid off 1 / 4 of its roughly 7,600 staff.
To persuade buyers it belonged in the identical class as “Covid-winners,” Airbnb’s providing prospectus introduced a grand imaginative and prescient. The monetary doc featured magazine-style spreads of friends and renters in stunning settings. It argued that it had invented a brand new form of journey whereas additionally offering financial stimulus, a remedy for loneliness and spreading “wholesome tourism.” And it unfurled a well-worn underdog narrative of resilience and redemption.
Enterprise & Economic system
A letter signed by Airbnb’s founders — Mr. Chesky, Joe Gebbia and Nathan Blecharzyk — included speaking factors that Mr. Chesky has repeated in quite a few interviews praising the readability the disaster had given him. The corporate emphasised that its dwelling leases might cater to vacationers taking highway journeys exterior cities and that its bookings started rebounding two months into the pandemic. The prospectus even argued that the pandemic had accelerated Mr. Chesky’s daring prediction that folks would sometime “reside anyplace.”
These messages resonated with buyers. “Individuals are within the title, not the financials,” Mr. Gellert mentioned. “This can be a firm that’s going within the fallacious route as we speak, from a monetary energy perspective.”
The pandemic was particularly tough for Airbnb as a result of it has largely had a rocket-ship trajectory that made it the toast of Silicon Valley. The corporate was based in 2008 as a approach to let individuals hire out an additional room and rapidly expanded to a community of seven million dwelling leases around the globe.
Airbnb embodies the final decade of extremely valued start-ups that used gig work, smartphones and piles of enterprise capital to upend previous industries, develop quick, postpone going public and fear about earnings later. Its fast rise introduced the thought of trip houses — and vacationers — into metropolis flats and residential neighborhoods. Its founders pitched messages of belief, neighborhood and dwelling like an area.
“Once we replicate again on assembly Brian, Joe and Nate, it was simply their capacity to inform a narrative of a world that could be very completely different than what exists,” mentioned Alfred Lin, an investor at Sequoia Capital and a member of Airbnb’s board.
Alongside the way in which, Airbnb has confronted laws and stricter guidelines for dwelling leases. The corporate has grappled with security considerations over events thrown at its leases, friends who trashed their locations, fraudulent listings, hidden cameras and hosts who racially discriminated towards friends.
These challenges have endured as enterprise has returned within the pandemic. Events have proliferated, and neighbors of Airbnb listings have change into extra vocal of their complaints. Hosts have change into offended with the corporate for overriding their cancellation insurance policies throughout the pandemic. Cities have begun to discover stricter laws.
Airbnb acknowledged these dangers in its providing prospectus whereas emphasizing its capacity to adapt within the face of catastrophe. Within the interview, Mr. Chesky mentioned that Airbnb didn’t anticipate enterprise journey or mass tourism to bounce again anytime quickly, however that the corporate was properly positioned to cater to different kinds of friends.
He talked about how Airbnb might cater to these searching for out of doors actions and longer-term stays, in addition to faculty college students who couldn’t return dwelling.
“If there was ever a second in time that we’d ever show we’re adaptable, it might be a pandemic,” Mr. Chesky mentioned.