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Summary
- Airbnb has recorded an unexpected stock market debut with the shares zooming more than 100 per cent in a day.
- Airbnb now commands a stock market value of $86.30 billion on the basis of the closing price of $144.71.
Airbnb Inc (NASDAQ:ABNB) has entered the capital markets with a bang as the shares of the San Francisco-headquartered online home-sharing platform rallied over 100 per cent upon the stock market debut on Thursday. Airbnb has successfully raised a total sum of $3.5 billion in the recently concluded initial public offering (IPO) at a share price of $68 per share, much higher than the upwardly revised range of $56-$60.
The stock of Airbnb, following the heavy buying, after listing on Nasdaq Composite, skyrocketed to hit a record peak of $165, up from the issue price of $68. As the trading progressed after lunch, Airbnb shares pared partial gains finally settling at $144.71 with a listing gain of 112.81 per cent.
Airbnb shares (10 December)
Source: Refinitiv, Thomson Reuters
Airbnb has been one of the most anticipated IPOs of this year. With the company registering an unforeseen stellar rise on debut, Airbnb’s market capitalisation has also swelled more than 100 per cent in a single day. According to the data available with the Nasdaq Stock Exchange, Airbnb now commands a stock market value of $86.30 billion.
On the very first day of stock market trading, around 70.45 million shares of Airbnb changed hands with the stock touching an intraday low of $141.25, up 108 per cent from the issue price.
Do Read: 2020’s Much-awaited Airbnb IPO Set to Launch In December!
IPO proceeds
Airbnb has earlier revealed that the net proceeds from the share sale will be utilised for meeting the working capital requirements, operating expenses and future capital expenditure.
The company can use a portion of the proceeds for acquisition or investments in businesses, technologies and products. However, Airbnb didn’t divulge any commitment or agreement for a material acquisition at the time of filing the prospectus with the United States Securities and Exchange Commission. Airbnb had said that the company would be utilising a definitive portion from the net IPO proceeds to cover a portion of an undisclosed amount of anticipated tax and remittance obligations.
No Dividends
Airbnb has indicated the company will be retaining the future earnings and does not intend to “declare or pay any cash dividends in the foreseeable future,” as the terms of certain outstanding debt instruments of the home-sharing firm restrict its ability of paying dividends or making distributions. At the end of 30 September, Airbnb had cash, cash equivalents and marketable securities to the tune of nearly $4.49 billion.
Also Read: Airbnb Restricts Unofficial Parties under-25s; Q2 Revenue Falls but IPO Plans On
Upcoming risks
The Covid-19 pandemic has battered almost all the firms in the hospitality sector following the stern restrictions imposed by the respective government and lockdowns. As per Airbnb, the actions to mitigate the global health emergency have adversely impacted the business, and the same is likely to be reflected by the results of operations and the financial condition.
The company expects a year-on-year (YoY) decline in the booking volume in the fourth quarter of 2020, while the gross booking volume (GBV) will see a quarter-on-quarter fall as compared to the third quarter of the present calendar year, Airbnb said.
The online home-sharing platform added that it is quite impossible to predict the cumulative impact of the pandemic on the future business, financial condition and results of operations.
