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The year of the Wall Street boom and bust pandemic will be capped off by one of the biggest tech IPO bubbles in years, as shares in vacation rental company Airbnb began trading well above its peak on Thursday. price.
The shares opened at $ 146, a massive jump from the $ 68 at which Airbnb sold them to new investors late Wednesday, and more than three times the $ 44-50 range the company gave last week.
That opening price values the loss-making company at $ 87.2 billion, or more than twice the market capitalization of the world’s largest hotel group, Marriott.
The day after delivery company DoorDash made an equally spectacular debut on the stock market, raising its valuation above $ 70 billion, Airbnb’s performance sparked unavoidable comparisons with the first internet bubble, which reached its peak. peak more than 20 years ago.
A rush of cash has fueled fast-growing tech stocks this year at a time when much of the stock market – and the global economy – is stagnant. Zoom, the emblem of working from home and one of the most popular IPOs of the past year, at one point reached a valuation of $ 160 billion.
But the IPO’s biggest hit in 2020 could be a company few people have heard of: Snowflake, a San Francisco data analytics group. Its stock price this week rose above $ 120 billion, dwarfing what was once the dominant IBM.
“Twenty years ago, the Internet bubble was increasingly the appropriate comparison,” said Jay Ritter, an IPO expert at the University of Florida. “Back then, the valuation of Internet stocks was divorced from the general market. Once again we are seeing this detachment ”.
Other analysts said the latest stock market euphoria had largely been confined to the IPO market and a handful of hot stocks like electric car maker Tesla, suggesting a different mindset was at play.
“This appears to be an IPO-driven phenomenon – we are not in 2000,” said Richard Clarke, an analyst at Bernstein. “It’s the end of the year, it’s a great way to generate profits. You can’t afford to miss it. ”Investors were in part looking for ways to bet on a rebound in the travel industry next year, he added, which had driven demand for Airbnb.
Airbnb’s spectacular debut on the stock market comes despite the damage to its business from the pandemic, which forced it to cut staff and raise an emergency funding round to avoid disaster earlier this year.
Brian Chesky, Airbnb chief executive, struggled for words on CNBC as he recalled the crisis. “That price would have cost us about $ 30,” he said of emergency financing. “I do not know what else to say. I am very honored by it. “
Chesky has a stake worth more than $ 11 billion at the opening price. He and his co-founders, Joe Gebbia and Nathan Blecharczyk, will retain 42.2 percent of the voting rights in the public company. The founders sold 1.5 million shares in the offering, amounting to about $ 106 million at the IPO price, while the company raised $ 3.4 billion in new money.
“Though [Airbnb has] it has obviously been affected by the pandemic, just like all travel, it is expected to actually receive most of the first tailwinds when people start to come out of hiding, ”said Max Gokhman, chief asset allocation from Pacific Life Fund Advisors.
