Airbnb and DoorDash IPOs may raise $6.2bn based on new price ranges

The home-sharing company may be valued as much as $42bn, while the largest food delivery service in the US could be worth $35bn, based on updated price ranges ahead of the listings

Home-sharing giant Airbnb, which is scheduled to go public this week, is raising its IPO price, valuing the group at more than $40bn. AFP

December is set to be the busiest year-end on record for initial public offerings in the US, with DoorDash and Airbnb ready to start trading this week in long-awaited listings.

The two startups, which are aiming to raise a combined $6.2 billion at the top-end of their price ranges, will propel the month’s IPO volume to all-time high, surpassing the $8.3bn mark set in December of both 2001 and 2003, according to data compiled by Bloomberg. IPOs on US exchanges have already raised a record $156bn this year, the data shows.

Both listings got an additional boost as the companies headed into the final stretch of marketing their shares. DoorDash upped the price range for its stock in a Friday filing, while Airbnb is planning to follow suit and increase its price range ahead of its IPO, people familiar with the matter said Sunday. The companies are now each expected to raise as much as $3.1bn, putting them among the top five biggest US IPOs of 2020.

Private companies that sat out the market chaos in the early days of the Covid-19 pandemic — and were awaiting a final outcome in the US election — are now rushing to go public. Airbnb and DoorDash will quickly be followed by three other mega-listings that could add billions of dollars to the IPO tally.

Also on deck to go public this month are Affirm Holdings, which lets online shoppers pay for purchases such as Peloton bikes in installments, online video-game company Roblox and ContextLogic, the parent of discount online retailer Wish. Each is likely to attain a valuation of tens of billions of dollars in its listing.

“This group of companies that you have coming out now maybe weren’t thought of initially as benefiting, but they’ve been able to show very strong results despite the coronavirus,” said Karen Snow, head of east coast listings at Nasdaq.

Airbnb is aiming to be valued at as much as $42bn in its IPO, while DoorDash could hit a valuation of about $35bn, based on their updated price ranges. For DoorDash, that’s more than double the private valuation it hit in a June fundraising round, after it seized on the pandemic-fueled boom in demand for meals brought to your door.

Airbnb had been valued at $18bn in April after raising additional debt to shore up its finances. The company, which was initially hit hard by global travel restrictions, has more recently seen a boom in customers seeking longer-term, domestic rentals.

Airbnb’s IPO will also be a lucrative event for many of its employees. The company has offered billions of dollars worth of stock compensation to staff, similar to Uber Technologies and other large venture-backed companies that have gone public. The IPO will make some of its longtime employees millionaires on paper.

Earlier this year, technology IPOs were dominated by enterprise software companies such as Snowflake, which has soared more than 200 per cent since its listing to a $110bn public market valuation. This month’s cluster of soon-to-be public entities — all based in the San Francisco Bay Area — cater to consumers stuck at home with extra time and cash on their hands.

Should the listings go well, it could signal investors are optimistic about an economic rebound after the dark days of the pandemic.

“There’s a lot of support and interest from institutional investors for companies that are impacted by Covid because the feeling is that they will recover,” said Neil Kell, Bank of America’s vice chairman of global equity capital markets.

“The mindset is not that we’re in December of 2020,” he said. “The mindset is how is it going to look a year from now.”

One enterprise software listing is also planned for this week. C3.ai, founded by former Oracle executive Tom Siebel, is expected to raise as much as $527 million in its IPO.

Bankers are using new methods to execute these large share sales, incorporating technology under development for years that was well-timed for use during the pandemic, when potential buyers can’t meet the company executives and advisers in person.

Airbnb, DoorDash and Roblox have asked prospective IPO investors to fill in their deal orders via an online portal, indicating their level of interest at any desired price, according to people with knowledge of the matter, who asked not to be identified because the details are private.

The new process is aimed at helping issuers and their advisers gauge demand, especially for high-growth companies subject to wide differences in valuation among investors, the people said. The final price and share allocation are still determined by the seller.

Representatives for the companies declined to comment.

Unity Software, used the same system in its September IPO. Unity sold its shares for $52 each and ended its first day of trading at $68.35. The shares closed om Friday at $150.94 apiece.