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Airbnb Dramatically Raises IPO Price Range

By Eric Volkman - Dec 7, 2020 at 5:45PM

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The high end of the sure-to-be-blockbuster IPO gets a 20% lift.

The monster end-of-year 2020 initial public offering (IPO) is poised to grow even bigger. On Monday, top DIY accommodation service operator Airbnb revealed in a new regulatory filing that it has raised its IPO price significantly, lifting it to a range of $56 to $60 per share. Previously, that span was only $44 to $50 per share.

All told, Airbnb intends to sell 50 million shares in the offering, which could raise gross proceeds of $3 billion at the upper end of the latest range. The IPO is scheduled for this Thursday, Dec. 10.

The issue isn't exactly coming at an opportune time for the company. Its accounting reveals that in the first nine months of 2020, it suffered a 32% year-over-year decline in revenue (to slightly more than $2.5 billion), and a net loss of almost $697 million -- over twice as deep as the same period the previous year.

The front desk of a hotel lobby.

Image source: Getty Images.

Like other big companies in the travel industry -- Expedia Group ( EXPE 3.49% ) and Booking Holdings ( BKNG 2.77% ) -- Airbnb has been hit hard by the global slowdown in vacationing. This is, almost needless to say, due to the persistent threat of the coronavirus pandemic.

Airbnb's 2020 decline in finances was in sharp contrast to its previous trajectory. A star "disruptor" in the hospitality industry, the company more than quintupled its revenue from 2015 to 2019, with a top line of more than $4.8 billion in the latter year. Along the way, it became the flagship company for DIY accommodation for both dwelling owners, and travelers looking for a more "homey" stay on their vacations.

Expedia and Booking Holdings stock both reacted differently to Airbnb's latest news. Expedia declined 1.6% on Monday, a steeper fall than that of the S&P 500 index, while Booking Holdings rose by 0.2%.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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Stocks Mentioned

Booking Holdings Stock Quote
Booking Holdings
$2,307.20 (2.77%) $62.17
Expedia, Inc. Stock Quote
Expedia, Inc.
$172.39 (3.49%) $5.82

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