US-headquartered short-term accommodation marketplace Airbnb is going public today in a $3.49bn initial public offering on the Nasdaq Global Select Market representing an exit for internet and technology group Alphabet.
The company is issuing 50 million class A shares priced at $68.00 each, significantly above the offering’s $56 to $60 range, while its shareholders are divesting just over 1.32 million shares at the same price.
The price values Airbnb at roughly $47bn, although recent first-day leaps by the likes of DoorDash, which is currently trading at a 75% premium to the share price of its $3.37bn IPO earlier this week, suggests that will likely rise.
Airbnb runs an online platform that enables users to list properties and rooms for rental by others, and although its business has been impacted sharply by social distancing measures amid the covid-19 pandemic, 5.6 million of its 7.4 million listings were active as of the end of September 2020.
The financial figures in Airbnb’s IPO filing show its revenue fell more than 30% year on year from about $3.7bn in 2019 to $2.52bn in the first nine months of this year. Its net loss rose from $323m to $698m over the same period.
The company intends to use part of the proceeds from the offering to meet about $1.4bn in remittance obligations relating to the settlement of its outstanding restricted stock units.
Airbnb received $1bn in debt and equity financing from private equity firm Silver Lake and investment firm Sixth Street Partners at a $26bn pre-money valuation in April this year, following $228m from undisclosed investors across rounds in April and August 2019.
Alphabet’s growth equity arm, CapitalG, co-led the company’s previous round, a $1bn series F, with growth equity firm TCV at a reported $31bn valuation in 2017.
General Atlantic, Hillhouse Capital, Tiger Global Management, Temasek, Kleiner Perkins, GGV Capital, China Broadband Capital, Horizon Ventures, Wellington Management, Baillie Gifford, T. Rowe Price, TPG, Tuesday Capital, Andreessen Horowitz, Dragoneer, Founders Fund, DST Global, Firstmark Capital, Sequoia Capital, General Catalyst, Y Combinator and SV Angel supplied Airbnb’s earlier funding.
None of Airbnb’s prominent investors are selling stock in the offering according to the IPO filing, and its pre-IPO shares are split into about 53.5 million class A shares, almost 492 million class B shares and 9.2 million class H shares, the last of which are reserved for its host endowment fund.
Sequoia Capital will retain its 16.5% portion of the company’s class B stock, with Founders Fund keeping 5.4% and DST Global 2.3%. The investors that will come out with the largest shares of its class A stock post-IPO are Silver Lake (5%), Sixth Street (3.9%) and DST Global (2.3%).
The lead book-running managers for the IPO are Morgan Stanley, Goldman Sachs and Allen & Company while BofA Securities, Barclays and Citigroup are book-running managers and BNP Paribas, Mizuho Securities, Credit Suisse, Deutsche Bank Securities, Jefferies and Wells Fargo Securities joint book-running managers.
The co-managers for the offering include Baird, Canaccord Genuity, Cowen, DA Davidson, JMP Securities, KeyBanc Capital Markets, Needham & Company, Oppenheimer, Piper Sandler, Raymond James, Stifel, Wedbush Securities and William Blair.
Academy Securities, Blaylock Van, CastleOak Securities, CL King, Guzman & Company, Loop Capital Markets, MFR Securities, Mischler Financial Group, Ramirez & Co, Siebert Williams Shank, Telsey Advisory Group and Tigress Financial Partners completed the list of co-managers.
The underwriters will have 30 days to take up an option to acquire up to 5 million additional shares at the IPO price, potentially increasing its size to approximately $3.83bn.
