Airbnb, DoorDash Seek Higher IPO Valuations
Airbnb and DoorDash are expected to release higher-than-expected valuation ranges for their upcoming initial public offerings (IPOs), which shows strength for the market, The Wall Street Journal (WSJ) reports.
WSJ writes that Airbnb is targeting a range around $30 billion to $33 billion, with a fully diluted share count, as it kicks off its investor roadshow Tuesday (Dec. 1). Initially the range was capped at $30 billion, the report says.
And DoorDash will target a range of $25 billion to $28 billion, also on a fully diluted basis — more than the $25 billion originally expected, according to WSJ.
Both companies are going beyond the rather conservative ranges usually expected of companies initially going public to leave room for pricing the shares higher.
While mid-December is usually a quiet month for IPOs, this year has seen a record amount raised for new U.S. exchanges, with soaring valuations catching the attention of numerous companies to join the public market. Activity has benefited from this, with the Nasdaq Composite hitting a new record for closing on Friday amid a shortened holiday trading season, WSJ reports.
Airbnb and DoorDash have done well for themselves during the COVID-19 pandemic. For Airbnb, the benefit came from people shirking larger hotels in favor of experiences that could allow them to stay isolated, with the heightened rates of domestic travel coming to help the company overall. Through the nine months ending Sept. 30, the company saw revenues dropping 32 percent, with operating losses growing from $173 million to $489 million in that period, PYMNTS reports.
Meanwhile, DoorDash reaped the benefits of people trying to avoid leaving the house to go out to restaurants. DoorDash plans to take a somewhat new tack in determining the price of its own IPO, planning to price its deal by asking investors to put orders through an online platform.
PYMNTS reports that DoorDash revenues surged over 220 percent for the period ending Sept. 30, to $1.9 billion.