Home rental provider Airbnb Inc.’s market capitalization surged to about $87 billion in its trading debut on the Nasdaq this morning, crowning its initial public offering as the largest this year for a tech firm. 

Airbnb raised approximately $3.5 billion prior to the opening bell by selling a reported 51.5 million shares at $68 apiece. That was at a valuation of $47 billion.

Shares of the company then went on to more than double, opening on the Nasdaq at $146 this morning and giving it a valuation of more than $87 billion. The stock, which trades under the ticker symbol “ABNB,” closed at $144.71. 

The IPO marks a major achievement for a company that had to lay off a quarter of its workforce earlier this year after bookings dropped by nearly 80%. Airbnb responded by taking on $2 billion in capital at a sharply decreased valuation and refocusing on domestic travelers, a gambit that has proved highly successful. 

“We have seen increases in domestic and short-distance travel, with more guests gravitating toward Airbnb stays within driving distance of their homes,” the company stated in the prospectus for its listing. “Tapping into this demand, we updated our website and mobile apps to actively promote available local and non-urban stays so guests can find something that fits their unique needs for location and desired length of time.”

Airbnb’s revenue rose to $1.34 billion in the third quarter of 2020, from $334.8 million during the previous three months, and the company even managed to turn a profit of $219 million. In the same period, its “Nights and Experienced Booked” metric fell 28% compared with the same period in 2019. But that amounted to a big improvement over the second quarter of 2020, when Nights and Experienced Booked declined 67% from the year-ago period.

The third quarter wasn’t the first time Airbnb turned a profit. The company also generated a positive net income in parts of 2018 and the third quarter of 2019. 

Airbnb estimated in its IPO filing that its total addressable market is worth no less than $3.4 trillion, which partly explains the lofty valuation the company received in its trading debut today. Airbnb sees a $1.8 trillion opportunity in short-term stays, a $210 billion opportunity in long-term stays and a $1.4 trillion market for “experiences.” Airbnb’s platform provides access to so-called Airbnb Experiences such as workshops and tours.

“Once there were millions of homes on Airbnb, we recognized that hosts could share not only their homes but also their interests and talents,” Airbnb stated in the IPO filing.  “We believe that we have just scratched the surface of the opportunities that hosting provides. There are many more ways people will want to connect with each other and the world around them, and so we will continue to design and enable new ways to host.”

Airbnb’s IPO comes a day after the stock market debut of DoorDash Inc., which also ranked as one of the year’s largest. The food delivery giant raised $3.37 billion from selling 33 million shares at $102 apiece and then saw its stock price surge to $182 at the opening bell. 

Photo: Pixabay