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Next up: Airbnb to go public in 2020

Airbnb is likely to adopt a less traditional approach to its public offering, such as through a direct listing.

Short-term rental and home stay service start-up Airbnb is planning to go public next year and set to be yet another prized technology firm to hit the public market, following on the heels of other technology companies Uber, Lyft, Slack, and Pinterest.

The firm which was founded in August 2008 and on last count said it had more than seven million listings in 100,000 cities around the world, gave away little details on its listing plans in its announcement on Thursday. According to sources that told The New York Times, the start-up unveiled its plans in order to adhere to the securities law which required for a disclosure on such plans before it can offer equity to the “hosts” who post their homes on its website.

Airbnb is likely to adopt a less traditional approach to its public offering, such as through a direct listing, the sources said. In such a listing, the firm will list its shares on a public market without raising additional funds. The latest firm that adopted such a strategy was workplace instant messaging platform Slack.

Airbnb - which is last valued by private investors at US$31 billion - is set to be another darling technology firm to list on the public market. But it is important to note that even though the year has seen a bumper crop of technology firms go public, the share price of some of those firms have not taken off.

Concerns from investors on some technology firms’ path to profitability have caused their stocks to trade poorly since their debut. The trade tensions between the United States and China have also added volatility to the shares as they are viewed as riskier options compared to more traditional products and firms.

Ride-sharing firm Uber, which priced its stock at US$45 per share, raised US$8.1 billion in its initial public offering (IPO), pegging its valuation at US$82.4 billion. The technology firm’s share price has faced some serious battering following its May debut. It now trades at US$33.82 as of Thursday (Sept 19, 2019), 24.8% lower than its listing price.

Likewise, Uber’s rival Lyft, is now trading at US$47.28, which is a 34.3% discount from its IPO price of US$72.

The news on Airbnb’s public listing is likely to be met with apprehension from stakeholders as only days ago, WeCompany, the parent of office-sharing firm WeWork closed the lid on its IPO after potential investors questioned the firm’s US$47 billion valuation and its business prospects. In its nine years as a start-up, WeWork has yet to turn a profit.

On Wednesday, Airbnb said it raked in more than US$1 billion in revenue for the second quarter but did not give details on whether it was profitable.

To balance out, the performance of some technology stocks listed thus far has seen positive interest from shareholders. Firms such as Zoom, Slack, and Pinterest are either flat or trading higher compared with their debut prices.

Slack which debuted in a direct listing in June at US$26 per share, is 1.07% lower as of Thursday’s US$25.72.

Video conferencing firm Zoom which priced its shares in April above the planned range of between US$32 and US$35, has more-than-doubled from its listing price with its current share price at US$84.62.

Meanwhile, Pinterest which went public at US$19 per share in April, is currently up 57%, at US$30.14.

This information has been prepared by IG, a trading name of IG Markets Limited. 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. See full non-independent research disclaimer and quarterly summary.

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