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Traders Set for Airbnb IPO

Airbnb is planning their initial public offering (IPO) this Thursday, December 10th, and is expected to be worth up to $42 billion. 

AirBNB IPO

Adding to the exciting group of companies who have gone public this year, Airbnb (ABNB) is poised to be one of the largest IPOs on the Nasdaq exchange in 2020. After initially estimating a potential valuation of approximately $31 billion, September earnings gave the company a new outlook on future growth. This has resulted in their valuation estimate rising up to 35% to approximately $42 billion.

In comparison, November saw Nights and Experiences bookings drop 114% year over year. By May, Airbnb saw an uptick of 9.2 million new bookings and 19.5 million new bookings in September. While this was down 68% and 28% YoY respectively, it indicates a trend towards a return to pre-pandemic levels.

Airbnb intends to issue four different classes of stock, each offering different rights depending on their category. 

  • Class A- each share of Class A stock will be entitled to one vote.

  • Class B- each share of Class B stock will be entitled to 20 votes.

  • Class C- each share of Class C stock will not be entitled to vote.

  • Class H- each share of Class H stock will not be entitled to vote, but can be converted to a Class A share on a share-for-share basis once sold to someone who is not a subsidiary of Airbnb. 

As of Monday, December 7th, the company predicts that its shares may trade between $56-60. That's more than 8% higher than their estimates from earlier in the month, which predicted a range of $40-$50.

Why Go Public Now?

The coronavirus pandemic impacted Airbnb’s profits, causing 1,900 jobs to be cut due to a high percentage of customer cancellations.

Airbnb’s reliance on 4 million local hosts around the globe allowed them to provide domestic accommodation for people who wanted to continue to travel, as airports and airlines were limiting access to international destinations. At the same time, Airbnb employee stock options are due to expire at the end of this year, putting pressure on the company to go public.

Another possibility for why Airbnb decided to go public this week may be due to last week’s decision by the UK to begin administering Pfizer’s (PFE) COVID vaccine and the upcoming US decision on the vaccine slated for Thursday. 

With both Pfizer’s and Moderna’s (MRNA) vaccine effectiveness reporting to be above 90%, traders may look past the current restrictions to growth in the travel industry.

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