What's going on?
Airbnb finally moved onto the stock market on Thursday, and investors loved what the house-sharing company had done with the place: its shares initially more than doubled.
What does this mean?
It almost goes without saying that pandemic-stalled travel has made life difficult for Airbnb, but the company surprised everyone last quarter by actually turning a profit, thanks to now-in-vogue “staycations”. Throw in the fact that some of its employees’ options were set to expire by the end of the year – which would leave their hard-earned stakes in the business worthless – and Airbnb thought it was about time it sold its shares to the public.
And boy did those shares sell: Airbnb raised $3.4 billion from its initial public offering (IPO), setting the overall company valuation at $47 billion. That’s not just one of the biggest US IPOs of the year, it also marks a massive step up from the $18 billion the firm was valued at in April.
Why should I care?
For markets: Confidence boost.
Airbnb upped its starting share price twice ahead of its stock market debut, which is a sign that investors are confident both in the company itself and in the travel industry’s eventual recovery (tweet this). That confidence could now spill over into other travel companies like Booking.com and Expedia – especially since their shares are looking cheaper than Airbnb’s.
The bigger picture: There’s nowhere to hide.
The sharing economy is facing more scrutiny these days: the UK government, for one, announced on Wednesday it’s going to start being stricter about taxing Airbnb’s landlords. They’re not employed by the company itself and don’t earn enough to incur the government’s “value-added tax”, which means anyone booking with them avoids paying an extra 20% on the basic fee. Now, though, that extra income sure could come in handy for a country with a $500 billion-shaped hole in its budget this year…