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Airbnb seeks valuation of $35 billion in public stock offering

Airbnb seeks valuation of $35 billion in public stock offering – nearly double what the company was worth in April at height of pandemic crisis

  • Airbnb set a target share price range of between $44 and $50 in filing Tuesday
  • Top end of target range would give Airbnb a valuation of $34.8 billion
  • That is nearly double the $18 billion company was valued at in April
  • It is also above the $31 billion valuation in its last pre-COVID round in 2017
  • Investors anticipate that vaccines will soon have travel back to normal levels
  • Founders Brian Chesky, Joe Gebbia and Nathan Blecharczyk set to make billions

Airbnb is aiming for a valuation of up to $34.8 billion in its initial public offering, in what would cap a stunning recovery of fortunes after the business was heavily damaged by the COVID-19 pandemic earlier this year.

In a regulatory filing Tuesday, Airbnb set a target share price range of between $44 and $50 to sell 51.9 million shares, which would pull in up to $2.85 billion at the upper end of the range.

At the top of Airbnb’s target range, the IPO will give Airbnb a valuation of $34.8 billion, nearly double the $18 billion Airbnb was worth in an April private fundraising round and above the $31 billion in its last pre-COVID-19 private fundraising in 2017. 

Investors have signaled that they expect vaccines to soon put an end to the pandemic, and anticipate a surge of travel as normal life resumes next year. 

Of the shares being sold, Airbnb founders Brian Chesky, Joe Gebbia and Nathan Blecharczyk will together sell nearly $100 million worth of shares in the IPO launch.

Co-founder of Airbnb Joe Gebbia stands to make $3.47 billion from his  13.9% stake after Airbnb announced it would seek a valuation of $35 billion in its IPO

Brian Chesky

CEO Nathan Blecharczyk

Co-founder Brian Chesky (left) stands to make $3.82 billion from his 15.1% stake while CEO Nathan Blecharczyk stand to make $3.47 billion off a 13.9% stake

Airbnb struggled in the immediate aftermath of the pandemic as travel came to a grinding halt. It had to lay off a quarter of its workforce and seek $2 billion in emergency funding from investors, including private equity firms Silver Lake and Sixth Street Partners.

Who will profit most in Airbnb IPO? 

  • Brian Chesky, Co-founder: $3.82B (15.1%)
  • CEO Nathan Blecharczyk, Co-founder: $3.47B (13.9%) 
  • Chief Strategy Officer Joseph Gebbia, Co-founder: $3.47B (13.9%)  
  • Peter Thiel, Investor $1.33B (5.4%)
  • Belinda Johnson, Director: $138.1M 

But as lockdowns eased, more travelers opted to book homes instead of hotels, helping Airbnb post a surprise profit for the third quarter. The San Francisco-based firm also gained from increased interest in renting homes away from major cities.

‘Looking at Airbnb there’s a lot to like. The company’s third quarter has shown they’ve bounced back better than a lot of their travel rivals,’ said Matthew Kennedy, senior strategist at IPO research firm Renaissance Capital.

Airbnb’s market capitalization at $50 per share would total $29.8 billion. Chesky’s stake would be valued at about $3.8 billion, while those of Gebbia and Blecharczyk would be worth about $3.5 billion each. Sequoia Capital, which first invested in Airbnb in 2009, would have a stake worth more than $4 billion.

Airbnb made its IPO registration public earlier this month. Reuters was the first to report in October that the startup was aiming to raise around $3 billion in its IPO that could value it at more than $30 billion.

Airbnb plans to list on Dec. 10 under the symbol ‘ABNB’ on Nasdaq.

AirBnb's headquarters building is seen in San Francisco in a file photo

AirBnb’s headquarters building is seen in San Francisco in a file photo

Airbnb’s stock market debut will be one of the largest and most anticipated U.S. IPOs of 2020, which has already been a bumper year for flotations. Record label Warner Music Group , data analytics firm Palantir Technologies and data warehouse company Snowflake Inc have all gone public in the past few months.

Airbnb was launched by Chesky and Gebbia in 2008 as a website to take bookings for rooms during conferences, including the Democratic National Convention that year in Denver.

It has since expanded listings to include apartments, houses and vacation rentals, allowing millions of ordinary homeowners to make money by renting their flats and houses while on their own holidays.

Airbnb achieved ‘unicorn’ status in 2011, with listed properties in 13,000 cities across more than 180 countries at the time, after being valued at more than $1 billion in a funding round led by Andreessen Horowitz.

Some of Airbnb’s other investors include Hollywood actor Ashton Kutcher, buyout firms General Atlantic, TPG, Hillhouse Capital and investment management firms Vanguard Group and Fidelity Investments.

Morgan Stanley and Goldman Sachs are the lead underwriters for the IPO.

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