Airbnb skyrockets in market debut

Yahoo Finance's Emily McCormick joined Yahoo Finance Live to break down the details of Airbnb's highly anticipated IPO, where the stock opened 115% above its IPO price.

Video Transcript

ADAM SHAPIRO: Let's get back to Airbnb, because talk about a blockbuster. Emily McCormick has been following this, and has more for us on their impressive IPO. Emily.

EMILY MCCORMICK: Adam, Airbnb opened this afternoon with a massive first-day pop. We saw shares opening at $146 apiece. That was a jump of 115% above the company's IPO price of $68 a share from last night. Shares climbed to a session high of as much as $165 intraday today, though it has pared some of those gains. But that opening price, again $146, put Airbnb's valuation at more than $100 billion on a fully diluted basis.

Huge increase here from the company's last private valuation of about $18 billion in April, and its pre-virus private valuation of $31 billion from 2017.

Now, last night, again, in that IPO, we saw Airbnb selling more than 50 million shares to raise about $3.5 billion. So that IPO was larger than what we saw from DoorDash on Tuesday. DoorDash had raised nearly $3.4 billion in what had also been an up-sized IPO. And those shares, for its part, popped about 78% in DoorDash's opening trade yesterday.

Now, it really has been an extraordinary journey over the past year here for Airbnb, one of the companies that has struggled because of the pandemic and stay-in-place orders, and the fact that travel demand has been depressed as a result of all these factors. We saw the company raise debt earlier this year. It laid off about 1900 workers, or about 25% of its workforce earlier this year. But it has come out a leaner company.

Now, we did see the company still posting a loss over the first nine months of this year, although it did post a profit in its third quarter, exclusively, most of that, again, due to the cost-cutting factor here. And then, taking a look at that top line. Even though we saw Airbnb decline-- or its revenue decline-- 32% in the first nine months of this year, it had been growing strongly leading up to the pandemic, with a boost of more than 30% in fiscal 2019. So, just taking a look, again, those shares trading much higher above that IPO price. We are seeing still here strong demand on the retail-investor side, Adam.

ADAM SHAPIRO: Emily McCormick, thank you very much. Congratulations to those at Airbnb.