Should investors chase hot IPOs like DoorDash?
Strategic Wealth Partners chief strategist Nate Fisher, Bulltick Capital Markets chief strategist Kathryn Rooney Vera and Kaltbaum Capital Management President Gary Kaltbaum provide insight into IPOs, recent market rallies and investing strategies.
Airbnb looks to be picking up where fellow tech service company DoorDash left off.
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For the second day in a row, a much anticipated initial public offering is pricing high above its original target range. Airbnb is at $68 per share, people familiar with the matter told the Wall Street Journal, far exceeding its previously announced target range of $56 to $60 a share.
The move puts the company at a valuation of about $47 billion on a fully diluted basis. The offering is expected to raise about $3.7 billion.
Airbnb’s IPO follows DoorDash, which began trading on Wednesday. The food delivery service and app saw its stock price soared 86% to $189.51 from its IPO price of $102. When the final trading bell rang DoorDash was valued at $60.2 billion.
Airbnb shares are set to begin trading on Thursday on the New York Stock Exchange under the symbol ABNB. The IPO will be led by Morgan Stanley and Goldman Sachs.
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Based in San Francisco, Airbnb makes money through charging short term rental managers, or hosts, and guests a service fee for bookings made through the company's platform. The house-sharing platform now boasts 4 million hosts worldwide, according to its IPO prospectus.
While Airbnb has seen significant growth and profitability since its founding in 2008, the company has recently been slammed due to the spread of the coronavirus pandemic.
According to Airbnb's prospectus, bookings on the platform fell by 72% in April compared to the year before. Airbnb laid off about 1,900 of its workers, or about 25% of its workforce, in May to mitigate those losses. In addition, the company raised $2 billion in debt funding in April.
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The company began to see a rebound between June and September with bookings only down around 20% from the year prior. In its latest quarter, the company made $219 million in net income on revenues of $1.34 billion, down nearly 19% from $1.65 billion in revenue a year prior. For the first nine months of 2020, Airbnb reported a net loss of more than $696 million on revenue of $2.5 billion, down 32% year over year.
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