“Airbnb Inc. plans to boost the proposed price range of its initial public offering, the latest sign that the red-hot IPO market is ending the year on a high note,” WSJ writes.
Rising Range: Airbnb initially planned on a price between $44 and $50. Now, it will seek to sell shares between $56 and $60.
- Similar news emerged about DoorDash’s IPO last week, which is now targeting $90 to $95 a share on a $36 billion potential valuation.
- Both companies’ target prices rose after a series of pre-IPO investor meetings known as “roadshows.” These are typically done cross-country but have been conducted over Zoom to adapt to the Covid-19 pandemic.
Why It Matters: “The new range would give the home-rental company a valuation of as much as $42 billion on a fully diluted basis and including proceeds from the offering.”
Airbnb and DoorDash are set to be the grand finale to an already record-setting year on the IPO market. New issues have raised more than $140 billion on U.S. exchanges this year alone, “far exceeding the previous full-year record high set at the height of the dot-com boom in 1999,” according to Dealogic.
- December is usually a “quiet time in the IPO market.” Instead, this year will close with Roblox and Wish parent Context Logic Inc. debuting along with Airbnb and DoorDash.
What’s Next? Both companies will set their final prices in the next few days. DoorDash plans to debut Wednesday, while Airbnb starts trading Thursday.
Looks like the market agrees with my assessment that Airbnb ($ABNB) should be worth more than $50 per share. Given my price target, I would still be a buyer at $60 per share. But if the stock pops too hard on IPO day, I will probably be waiting for the stock to pull back to enter.