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Airbnb Sets to Raise $2.5B via IPO Later This Month

UTC by Steve Muchoki · 3 min read
Airbnb Sets to Raise $2.5B via IPO Later This Month
Photo: Depositphotos

Airbnb bookings have dropped significantly during the coronavirus pandemic, with over 41% while the company is planning its IPO.

American vacation rental online marketplace platform Airbnb is set to raise up to $2.5 billion through an initial public offering later this month. The Airbnb company has set the price range per share between $44 and $50 according to its IPO prospectus. Hereby raising its market valuation to $35 billion on a fully diluted basis.

The company’s core business has significantly been affected by the ongoing coronavirus crisis as more people remain indoors to avoid contracting the virus. However, market data indicates it has performed fairly in comparison to its peers.

Notably, existing investors anticipate selling Airbnb stake worth $96 million during the IPO. The raised funds will help the company run smoothly through the pandemic. Moreover, there are high hopes that a viable coronavirus vaccine or drug will be approved perhaps early next year.

As a result, the company anticipates the economy will rebound significantly and the tourism industry will be among the top to recover. In the long term, Airbnb stocks become valuable as the company offers competitive services at competitive prices.

Airbnb will list on Nasdaq under ticker ABNB.

Airbnb IPO and Its Market Roundup

The company has been involved in prior private fundings, whereby earlier this year it managed to raise $2 billion. Previously, the company had raised $555.5 million from Google Capital back in 2016. Whereby the following year it managed to raise $1 billion from private investors.

Currently valued at approximately $31 billion, the company will become a major unicorn in its industry.

Notably, the company first became profitable during the second half of 2016, whereby its revenue grew more than 80% during that fiscal year. Not until last year when the company posted a loss of $322 million and the case was magnified by the coronavirus pandemic at the beginning of the year.

Apparently, Airbnb bookings have dropped significantly during the coronavirus pandemic, with over 41%. Hereby dropping its revenue by over 70% during the second quarter of 2020. The company was compelled to lay off approximately 25% of its employees.

The figure was similar to the third-quarter results, as most people generally behavior heavily remains controlled by coronavirus pandemic. However, the company stated in the IPO filings that in some states people had begun to travel and book places that are less affected.

“They decided to get in their cars and travel close to home, often staying in small towns and rural communities,” Airbnb’s founders wrote in their letter to prospective shareholders in the filing. “Our business rebounded faster than anyone expected, and it showed that as the world changes, our model is able to adapt.”

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