Short-term rental and experience company Airbnb made its initial public offering paperwork public right after the closing bell on Monday. Investors have long been waiting for the filing with the U.S. Securities and Exchange Commission, especially as the Airbnb IPO will be one of the most high-profile debuts in 2020. What do investors need to know? And why does this IPO matter?
Here are the top things you need to know about the Airbnb IPO news:
- Airbnb plans to come public on the Nasdaq Exchange under the ticker symbol ABNB.
- Importantly, it plans to list its common stock in four classes. Class A comes with one vote per share, while Class B comes with 20 votes per share. Holders of Class C and Class H common stock will not have any voting rights.
- Investors should also note that Airbnb did not disclosure how many shares it will offer in the SEC filing, nor what the IPO price range will be.
- It is also important to note that this is a traditional IPO. Leading up to Monday, there was some speculation that Airbnb would pursue a direct listing.
- Airbnb will set aside 9.2 million shares of the Class H common stock for an endowment.
- What does this mean? Airbnb plans to use this endowment to help its hosts in areas like education and emergency financial aid.
- According to Axios, this endowment will go into effect once those 9.2 million shares reach $1 billion in value.
- Investors were also looking for an updated look at its financials. Airbnb made $219 million in net income on revenue of $1.3 billion in the third quarter. That revenue was down from $1.6 billion last year.
Why the Airbnb IPO Really Matters
As I mentioned above, a lot of anticipation has led up to the Airbnb IPO. Rumors began swirling over a year ago, and many investors are excited that the wait is finally over. Additionally, Airbnb is coming public alongside DoorDash and likely Roblox. These three IPOs will be some of the most watched this year. However, there is one more big reason that this matters for investors.
At the start of the pandemic, travel demand came to a screeching halt. Airbnb cut staff. It raised new debt funding. The Airbnb IPO went up in the air. How could the company come public when its hosts were struggling to make ends meet and no one was booking weekend trips?
However, leading up to the market debut, Airbnb has been somewhat of a turnaround story. Many industry experts reported a rebound in travel demand, especially to rural locations. Why? People were simply sick of staying at home and wanted to experience isolation with new scenery. This in turn boosted Airbnb and its short-term rental peers, putting the company back on track for a 2020 IPO.
What is the bottom line? The arrival of the Airbnb IPO will end a long story of waiting, delays and anticipation. Additionally, it has the potential to mark the end of a successful rebound and the start of a new chapter for the company.
On the date of publication, Sarah Smith did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Sarah Smith is a Web Content Producer for InvestorPlace.com.