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Airbnb raises IPO share price range to $56-60 ahead of listing

At the top end of its recently revised IPO share price range, Airbnb has an implied market capitalisation in excess of $40 billion – making it potentially one of the largest IPOs of the year.

Airbnb ups IPO share price range

2020 has proven to be an exciting and volatile year for initial public offerings (IPOs) – with the likes of Snowflake, Palantir, and Unity all listing to much fanfare.

Speaking to this bullish atmosphere, on its first day of trade, cloud company Snowflake saw its share price close at $339, a staggering 182% higher than its IPO issue price.

Rental platform company Airbnb looks set to continue that trend of blockbuster public offerings, on Tuesday raising its IPO share price range to between $56-60 per share – up from between $44 to $50 per share – ahead of Thursday’s upcoming IPO.

At the top end of that range, Airbnb would have a market capitalisation of around $42 billion, on a fully diluted basis, making it one of the largest IPOs of 2020.

Moreover, grey market trade activity suggests that investors are expecting big things from Airbnb’s public offering, with IG's Airbnb Grey Market last trading at US$66.5 billion.

For reference, the price of a grey market represents a prediction of what the company’s total market capitalisation will be at the end of its first trading day.

If you think the estimated value of the company is over- or under-priced, a grey market enables you to take advantage of this disparity before the shares are released publicly on the stock exchange.

Learn more about IG’s Airbnb grey market here.

A challenging year for Airbnb

The coronavirus pandemic decisively threw a cog in the works for the fast growing rental platform company, with the company reporting a significant revenue deceleration in 2020, reporting revenues of $2.51 billion for the nine months ending September 30, down from $3.69 billion in the prior corresponding nine month period.

In addition to that, for those first nine months of 2020, the company has recorded a net loss of $696 million, up from a loss of $322 million in the prior corresponding period.

Despite those mounting losses, customers continue to flock to the platform. As the company proudly wrote in its IPO prospectus:

'In 2019, 54 million active bookers worldwide booked 327 million nights and experiences on our platform, and since our founding, there have been over 825 million guest arrivals on Airbnb.

Moreover, speaking to the deep brand value accrued by the company over the years, Airbnb reported that the vast majority of its customers come to the site organically, with 91% of traffic derived from direct or unpaid channels over the last three quarters in 2020.

Adding to that, it was pointed out that:

‘Guests are highly engaged and contribute value for hosts and other guests: over 68% of guests left reviews of their stays in 2019, and collectively, hosts and guests have written more than 430 million cumulative reviews as of September 30, 2020.'

'Many of these guests return to our platform; during 2019, 69% of our revenue was generated by stays from repeat guests.’

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This information has been prepared by IG, a trading name of IG Australia Pty Ltd. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.

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