The previous year brought us some big news in the world of initial public offerings, like Uber Technologies, Inc. (NYSE: UBER), Lyft, Inc. (NASDAQ: LYFT), and Beyond Meat, Inc. (NASDAQ: BYND). Even though 2020 is drastically different than any other year in modern history due to a global pandemic, it is also a year in which many perspective companies are expected to transfer from the private to the public market. Some of those “gems” are worth billions or tens of billions of dollars, and many investors are looking forward to taking a piece of that action. Perhaps the most eagerly awaited IPO is by Airbnb which filed to go public on Monday.
Snowflake Inc. (NYSE: SNOW), the cloud-based data warehousing company, allowing its users to store, share and transfer data between multiple platforms like Microsoft’s (NASDAQ: MSFT) Azure, Google’s (NASDAQ: GOOG) Cloud, Amazon’s (NASDAQ: AMZN) AWS, and Salesforce (NYSE: CRM), went public in September. It was expected to start with a share price between $75 and $85, but the company went public at $120, skyrocketing to $300 during its first day of trading. This is how Snowflake became the biggest company to ever double its value on its opening day. It reached a market cap of close to $75 billion.
Palantir Technologies Inc. (NYSE: PLTR), a data-mining company, also went public in September, with the initial valuation of $22bln. When Asana, Inc. (NYSE: ASAN), a collaboration Computer company, went public in September, its stock initially opened at a share price of $27. That was 22% above the reference price of $21, which was set by the NYSE. Asana’s valuation was $3.99 billion.
Airbnb, a vacation rental online marketplace company based in San Francisco, California, filed for an initial public offering on Monday. The company decided to trade on the Nasdaq exchange and chose the ticker symbol ABNB. Robinhood, the free stock trading app which became the first widely used broker to offer zero-fee trading, with a current valuation of $11.2bln, is also expected to move from private to the public market in 2020, as well as Doordash, the food delivery app, Wish, an e-commerce company, and Bumble, an online dating app, second to Tinder in popularity.
Details from Airbnb’s IPO filling
Airbnb’s business was severely hit by the pandemic and the winter projections have been significantly weakened due to the current situation. Although the company reported a profit of $219.3 million in the third quarter on $1.3 billion in revenue, this is still a drop of nearly 18% in revenue compared to the same quarter last year. This profit in the third quarter was a result of severe cost-cutting measures, which revealed just how much had the pandemic devasted the online booking and rental business. Airbnb’s second-quarter results plummeted due to countless booking cancellations and other pandemic-related impacts, leading to a net loss of $575.6 million. Its competitors Expedia (NASDAQ: EXPE) and Booking Holdings (NASDAQ: BKNG) reported similar results, with a 58% and 48% annual drop in their respective revenues.
Even before the COVID-19 pandemic, Airbnb didn’t exactly have clear skies leading to its IPO. COVID-19 made that journey even bumpier with a detrimental effect on the entire travel industry. The future of travel still remains uncertain as the fear of an even worse winter wave is upon the world. Although recent vaccine developments are favorable, recovery will take time. Also, Airbnb’s model relies on the hosts who use their platform to offer their properties for rent. If they do not survive this crisis and without new hosts, Airbnb’s business model is threatened. But, despite a raging pandemic, Airbnb is poised to make its public debut this year.
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