Airbnb Expected to Price IPO Above Range

The expected price indicates Airbnb would be valued at more than $42 billion based on a fully diluted share count and including proceeds of the offering, which is expected to raise in excess of $3.3 billion.

Airbnb’s executives and its underwriting team will be closely watching how DoorDash Inc.’s stock trades in its debut Wednesday, the other big IPO of the week. The San Francisco food-delivery company priced its shares far above its boosted price range Tuesday. DoorDash notched a valuation of $39 billion on a fully diluted basis and including proceeds.

When Airbnb started its investor roadshow last week, the company established an initial per-share target range of $44 to $50. But it soon became clear that was too low.

Both Airbnb and DoorDash are making a debut as the IPO market shatters records, helped by the stellar performance of recent technology listings. So far in 2020, well over $140 billion has been raised on U.S. exchanges, far exceeding the full-year record of $107 billion set at the height of the dot-com boom in 1999, according to Dealogic data that date to 1995.

Should Airbnb achieve a public-market valuation in excess of $42 billion as expected, the IPO would mark a key milestone in the company’s turnaround during a tumultuous year in its history.

Airbnb had planned to make its widely anticipated debut earlier this year, but then the pandemic hit, hammering bookings in Asia, Europe and the U.S. Chief Executive Brian Chesky pivoted to raise capital to keep the business afloat, laid off a quarter of staff and shed noncore operations. Business improved in the third quarter because of the combination of deep cost cuts and an unanticipated pickup in local stays. The company posted a profit of $219 million in the period.

The Covid-19 pandemic continues to be Airbnb’s biggest near-term challenge. Investors must also contend with risk factors such as cities weighing zoning restrictions on short-term rentals and Airbnb’s difficulties policing crime and promoting safety on its platform—a matter that is expected to draw more scrutiny as it becomes a public company. Airbnb is also one of the few Silicon Valley startups with a presence in China, though the U.S. and Europe continue to be its biggest markets.

December is typically a quiet time in the IPO market. This year there will instead be a flurry of offerings. In addition to Airbnb and DoorDash, videogame company Roblox Corp. and the parent of online retailer Wish, ContextLogic Inc., are planning debuts before the year is through.

Morgan Stanley and Goldman Sachs Group Inc. are leading Airbnb’s IPO, and Morgan Stanley will be the “stabilization agent,” which can intervene to steady trading in the company’s stock by buying shares. The shares are set to begin trading on the Nasdaq Stock Market under the symbol ABNB.

Write to Maureen Farrell at [email protected]