Airbnb and DoorDash sink as analysts turn skeptical of massive IPO rallies

airbnb ipo nasdaq
The Airbnb logo is displayed on the Nasdaq digital billboard in Times Square in New York on December 10, 2020. – Home-sharing giant Airbnb was set for its Wall Street debut Thursday with a whopping $47 billion valuation amid a feverish rush for new shares in companies adapting to lifestyle changes imposed by the coronavirus pandemic. (Photo by Kena Betancur / AFP) (Photo by KENA BETANCUR/AFP via Getty Images)

  • Airbnb and DoorDash shares fell on Monday after analysts downgraded the newly public companies’ stock.
  • Both firms surged last week as outsized demand pushed prices well above their IPO levels.
  • Gordon Haskett downgraded Airbnb to “underperform” from “buy,” and expects shares to fall roughly 20% from current levels.
  • DA Davidson lowered DoorDash to a “neutral” rating from “buy,” adding that the company’s stock price leaves little room for future error.
  • Watch DoorDash trade live here.
  • Watch Airbnb trade live here.

Airbnb and DoorDash both tumbled on Monday as analysts downgraded ratings following both firms’ colossal public-market debuts.

Airbnb sank as much as 10.1%, while DoorDash plunged 13.6% at intraday lows. The two companies collectively raised $6.7 billion in back-to-back initial public offerings last week, capping a record year for IPOs. Massive demand for the firms’ shares fueled massive gains in their first days of trading, but analysts covering the companies are growing concerned that the stocks climbed above rational trading levels. 

Gordon Haskett changed its rating for Airbnb to “underperform” from “buy” on Monday, eschewing the bullish outlook he held for the firm just one week ago. The home-sharing company’s valuation is “more than stretched” after more than doubling in its Thursday debut, the firm said. Airbnb also trades at two times its estimated gross bookings value, where the average online travel group trades at a 0.6 multiplier, Gordon Haskett said.

The firm lifted its price target to $103 from $77, but the level still implies a roughly 20% drop from current levels.

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Separately, DA Davidson downgraded DoorDash to “neutral” from “buy” following the firm’s 86% opening rally. The firm still feels DoorDash deserves to trade at a premium multiple due to its leadership in the food-delivery sector but noted its stock price leaves little room for error.

DA Davidson boosted its price target for DoorDash to $150 from $93. That level implies a slight drop from the stock’s current price. No other analysts have initiated ratings on DoorDash shares. 

Despite the shift in analyst sentiments and Monday losses, both companies still trade well above their IPO prices. Their rallies have fueled new scrutiny of market optimism, with some strategists concerned that the outsized demand for new issuances is a symptom of dot-com-era greed.

DoorDash traded at $157.51 as of 3:10 p.m. ET Monday. Airbnb traded at $129.33.

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Affirm joins Roblox in delaying its planned 2020 IPO after monster gains from Airbnb, Doordash

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  • Affirm is delaying its planned IPO until next year, making it the second company in days to put their public debut on hold, according to The Wall Street Journal.
  • The move comes shortly after Roblox decided to postpone its planned 2020 IPO until next year to seek a higher price, given the strong investor demand for high-growth tech IPOs.
  • The recent IPO frenzy has been accelerated by the strong trading debuts of Airbnb and DoorDash earlier this week.
  • Visit Business Insider’s homepage for more stories.

Affirm’s planned 2020 IPO has been put on hold until next year, The Wall Street Journal reported on Saturday, citing people familiar with the matter.

The point-of-sale lender’s decision to postpone its IPO comes shortly after Roblox decided to postpone its planned 2020 IPO until next year to seek a higher price, given the strong investor demand for high-growth tech IPOs.

Affirm planned to begin pitching its shares to potential investors this coming week, and was on track to receive a market valuation of as much as $10 billion, according to The Journal.

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Part of the reason Affirm delayed its offering was due to the high price spikes in recent offerings from Airbnb and DoorDash, as well as delays at the Securities Exchange Commission due to a surge in listing requests from private companies, the Journal reported.

Airbnb surged as much as 143% in its first day of trades on Thursday, while DoorDash closed higher by 86% in its first day of trading on Wednesday.

Now, Affirm’s public debut won’t come until January at the earliest, according to the report. 

Affirm and Roblox are attempting to strike a delicate balance of not leaving any money on the table by pricing their IPO at too low of a price, yet also not pricing their shares too high, which might lead to a weak trading debut. Meanwhile, both companies are hoping (and betting on) that the IPO window remains open early next year.

A steep correction in the stock market can occur at any time, closing the IPO window, as that’s not an ideal environment for a private company to go public.

BlackRock CEO Larry Fink believes the recent IPO frenzy is “unsustainable” and could lead to “many accidents.”

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DoorDash and Airbnb are not the future of tech leadership, says venture capitalist Gene Munster. He breaks down 3 under-appreciated tech stocks that have greater potential.

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  • Venture capitalist Gene Munster told CNBC on Friday that while Airbnb and DoorDash are “phenomenal,” there’s more potential for upside in underappreciated tech names including Zillow, Carvana, and Take Two Interactive.
  • The Loup Ventures co-founder and veteran tech analyst said he owns Zillows personally and with a valuation of just a third of Airbnb’s, it has potential to be “massive.”
  • Munster also said that he likes online used-vehicle sales platform Carvana. That stock is up over 180% year-to-date and trades at roughly $261 a share.
  • Visit Business Insider’s homepage for more stories.

Venture capitalist Gene Munster told CNBC on Friday that while recent IPO’s like Airbnb and DoorDash are “phenomenal,” he sees a different class of tech stocks taking leadership in the future.

“This recent IPO class is phenomenal, they are disruptors,” Munster said of Airbnb and DoorDash. But he added that a lot is priced into their valuations already, and the best stock performance is going to come from underappreciated tech stocks like Zillow, Carvana, and Take-Two Interactive.

The Loup Ventures co-founder and veteran tech analyst said he owns Zillow personally and that it will be “massive.” The online real estate company is currently valued at a $29 billion market capitalization, just one third of Airbnb, Munster added. 

“They’re gonna take what they do so well about capturing the users on a monthly basis, checking out real estate, renting, buying and add other products to that,” he said on Zillow. 

Read more:Who’s going to catch them?’: A Tesla analyst who once covered Intel breaks down the similarities he sees in the 2 disruptive companies – and shares why the stock has the potential to soar another 30%

Zillow is up roughly 170% year-to-date and is currently trading around $124 a share.

Munster also said that he likes online used-vehicle sales platform Carvana. That stock is up over 180% year-to-date and trades at roughly $261 a share. 

Video game company Take Two Interactive was another one of Munster’s picks. The stock is trading at $190 a share and is up 55% year-to-date.

When CNBC’s Joe Kernan asked Munster if he would put the same faith he has in tech giants like Amazon, Facebook, and Google, into DoorDash and Airbnb, Munster said: “No, I wouldn’t.” 

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A legendary venture-capital firm bought Airbnb shares for 1 cent each in 2009

Airbnb IPO
The Airbnb logo is displayed on the Nasdaq digital billboard in Times Square in New York on December 10, 2020.

  • Airbnb’s stock price soared to about $145 during its stock-market debut on Thursday.
  • Sequoia Capital invested $585,000 in the home-rental platform for around 58 million shares in 2009, paying about 1 cent a share, The Information reported.
  • The venture-capital fund has plowed a total of $280 million into Airbnb over the years, giving it a stake worth almost $12 billion at the close on Thursday.
  • Sequoia backed Airbnb when it had only 2,500 listings on its website; it had 5.6 million active listings at the end of September.
  • Visit Business Insider’s homepage for more stories.

Airbnb’s stock price more than doubled to about $145 on Thursday, valuing the home-rental platform at north of $85 billion on its first day of trading. One of the company’s earliest backers paid just one cent a share when it invested in April 2009.

Sequoia Capital – a storied venture-capital fund that counts Apple, Google, and Instagram among its past investments – handed Airbnb a seed investment of $585,000 for around 58 million shares, according to The Information. It participated in several later funding rounds, ultimately spending about $280 million for nearly 82 million shares, which were worth close to $12 billion on Thursday.

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The return on Sequoia’s initial investment is astronomical, and its total $280 million bet has paid off handsomely too. It spent an average of $3.40 on shares worth about $145 each on Thursday – a roughly 43-fold gain.

Sequoia has been richly rewarded for recognizing the potential of Airbnb when it was less than a year old. When it first invested almost $600,000, Airbnb had 2,500 listings and 10,000 registered users, the firm said in a blog post. The platform had 5.6 million active listings and more than 4 million hosts as of September 30 this year.

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‘It’s silly season’: Airbnb and DoorDash’s IPO rallies signal return of dot-com-era greed, strategists say

Airbnb IPO
The Nasdaq digital billboard in Times Square in New York on December 10.

  • Airbnb’s and DoorDash’s massive debut rallies suggest the IPO market is getting ahead of itself, top strategists said Thursday.
  • Airbnb spiked 115% when it began trading publicly for the first time on Thursday. DoorDash closed 86% higher in its Wednesday debut.
  • The first-day climbs revealed “euphoria and greed” last seen in the market during the dot-com bubble of the late 1990s, Paul Schatz, the president and chief investment officer of Heritage Capital, said.
  • “It’s silly season,” and investors need to differentiate between “a great company and a great price or value,” Rich Steinberg, the chief market strategist at the Colony Group, told Business Insider.
  •  Visit the Business Insider homepage for more stories.

Airbnb’s and DoorDash’s colossal post-IPO pops reveal unsustainable euphoria in the stock market, top strategists said.

Some of the year’s biggest initial public offerings took place this week, adding to an already record year for market debuts. DoorDash soared 86% when it began trading on Wednesday after raising $3.2 billion through its offering the day prior. Airbnb leaped 115% when it began trading Thursday afternoon, pushing its market cap above $100 billion and raising $3.5 billion.

The first-day rallies, while extraordinary, show “euphoria and greed” that’s likely not been seen in the stock market since the dot-com bubble of the late 1990s, Paul Schatz, the president and chief investment officer of Heritage Capital, said. Many investors are rushing to the new stocks, wanting to get in at any price, but such massive IPO bounces usually give way to similarly outsize losses, he added. 

“It’s silly season,” Rich Steinberg, the chief market strategist of the Colony Group, told Business Insider. “Investors need to distinguish the difference between a great company and a great price or value.”

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Both strategists attributed some of that euphoria to the near-zero interest rates expected to stay put over the next three years. The Federal Reserve’s plan to hold rates at record lows leaves investors with fewer places to put their money, as the policy suppressed Treasury yields early in the pandemic. The Fed’s backstop of the corporate credit market placed similar pressure on bond yields.

The combination of near-zero interest rates, a “tsunami of liquidity,” and hundreds of billions in unallocated investor cash fueled the two buying sprees, Schatz said.

The week’s booms might be only the start. Investors could face “complete and utter mania” across the IPO market in the first half of 2021 as more firms look to tap the market while demand remains strong, the Heritage Capital president said. Investors should avoid trying to time such volatile debuts and instead be patient until stock prices better reflect firms’ fundamentals, he added.

“Being the last guy buying the opening of a hot IPO, at the height of this speculative excess in some of these names, typically does not end well,” Steinberg said. 

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Airbnb is worth more than the 3 largest hotel chains combined after its stock popped 143% on its first day of trading

Airbnb IPO
The Airbnb logo is displayed on the Nasdaq digital billboard in Times Square in New York on December 10, 2020.

Airbnb’s stock soared on Thursday in its highly anticipated public market debut, closing at $144.71 per share, more than double its initial offering of $68 per share.

That price also gives the short-term rental giant an approximately $86.5 billion valuation. Or, more than the combined market capitalization of the top three hotel chains globally: Hilton Worldwide Holdings, Marriott International, and Intercontinental Hotels Group, which were together worth $84.1 billion when the markets closed Thursday.

Airbnb also surpassed its largest rival among online travel agencies, or OTAs: Booking.com closed at $86.2 billion on Thursday.

Airbnb’s private valuation fluctuated dramatically this year, dropping from $31 billion to $18 billion as the COVID-19 pandemic devastated its business, forcing the company to lay off 25% of its workforce and raise more than $2 billion in debt and equity financing, and even calling the timing of its IPO into question.

But after announcing a surprise $219.3 million Q3 profit when it publicly revealed its IPO filing earlier this month and initially hoping to raise $3.5 billion, Airbnb’s stock traded as high as $165, roughly 143% of its initial asking price of $68.

Read more: Airbnb has navigated the pandemic better than its rivals – but the company’s uncertain future depends heavily on forces beyond its control

Airbnb’s successful opening day comes amid a broader tech IPO frenzy this year despite massive economic fallout from the pandemic. On Wednesday, DoorDash and C3.ai posted substantial gains of 78% and 174%, respectively. And in September, Snowflake completed the largest software-technology IPO in history with a 258% surge and has been on a tear since its debut.

But top strategists said the massive debut rallies of Airbnb and DoorDash revealed an unsustainable optimism in the markets.

Paul Schatz, president and chief investment officer of Heritage Capital, told Business Insider’s Ben Winck the rallies showed “euphoria and greed” that’s likely not been seen in the stock market since the dot-com bubble of the late 1990s.

“It’s silly season,” Rich Steinberg, chief market strategist at The Colony Group, told Winck. “Investors need to distinguish the difference between a great company and a great price or value.”

Still, Airbnb’s IPO was a huge boon for its three cofounders, who are now worth $10 billion to $11 billion each, as well early employees, executives and investors.

Read the original article on Business Insider

Airbnb prices IPO at $68 per share, will raise $3.5 billion

Airbnb Logo+ Stocks
  • Airbnb priced its shares at $68 each on Wednesday ahead of its IPO, Bloomberg first reported.
  • That’s well above Airbnb’s previously expected IPO pricing range of $56 to $60 per share, which already marked an upsize from a prior range.
  • The offering is expected to raise $3.5 billion in funds for Airbnb, giving the company a valuation of $47.3 billion. Airbnb will trade on the Nasdaq exchange under the ticker symbol “ABNB.”
  • Visit the Business Insider homepage for more stories.

Airbnb priced its shares at $68 each on Wednesday ahead of its highly anticipated initial public offering.

The final price came in well above its previously expected range as heightened investor demand for the offering pushed the price higher. Airbnb initially priced the expected range of its IPO shares at $44 to $50, which was subsequently raised to $56 to $60.

Airbnb’s IPO will raise $3.5 billion in funds for the company, giving it an initial valuation of $47.3 billion. The firm will trade on the Nasdaq exchange under the ticker symbol “ABNB.”

In its last private funding round in April, when the home-sharing company raised $1 billion amid the pandemic, Airbnb was valued at $18 billion, representing a sizable cut to its 2017 valuation of $31 billion. The company has more than recouped that valuation cut in its IPO debut.

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Airbnb has led high-profile IPOs in late 2020, joining the likes of DoorDash and Affirm. While many expected the IPO to be closed shut in 2020 given the COVID-19 pandemic and volatile stock market that experienced as 35% decline earlier this year, a strong recovery in both stocks and investor confidence has reopened the IPO window for many high-profile private companies.

According to Bloomberg data, US listings have already raised a record $156 billion in 2020, in part fueled by the rise in blank-check special-purpose acquisition companies.

Morgan Stanley is serving as the lead underwriter for Airbnb’s debut. 

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DoorDash prices IPO at $102 per share, will raise $3.4 billion

doordash delivery driver
  • DoorDash priced its shares at $102 apiece on Tuesday ahead of its IPO, CNBC’s Leslie Picker reported. That comes in well above the expected range.
  • The offering is expected to raise $3.4 billion, and it gives the food-delivery company a valuation of $32.4 billion.
  • DoorDash lifted its pricing range on Friday to $90 to $95, from $75 to $85. Its new pricing sets the company up to be one of the year’s biggest debuts.
  • DoorDash is set to trade on the New York Stock Exchange under the ticker “DASH.”
  • Visit the Business Insider homepage for more stories.

DoorDash priced its shares at $102 each on Tuesday ahead of its highly anticipated initial public offering, CNBC’s Leslie Picker reported. The final pricing comes in well above the expected range.

That pricing will allow the company to raise $3.4 billion when it begins trading on Wednesday, according to a regulatory filing. It also gives the firm a $34.2 billion valuation, based on common stock outstanding, and $38.7 billion on a fully-diluted basis. It will mark one of the year’s largest market debuts.

The pricing brings DoorDash well above the roughly $15 billion private valuation it achieved earlier in 2020, which was already a major increase from the $1.4 billion it was worth in 2018.

DoorDash is poised to become the highest-valued food-delivery company when it debuts on the New York Stock Exchange. The company is set to trade under the ticker “DASH.”

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DoorDash lifted its IPO price range on Friday to $90 to $95, from $75 and $85 per share. Its latest target sets it up to be among the year’s five largest offerings.

IPOs from DoorDash, Airbnb, Wish-parent ContextLogic, and others are set to drive the busiest December on record for public offerings. US listings have already raised a record $156 billion in 2020, according to Bloomberg data, partially fueled by the year’s blank-check frenzy.

Goldman Sachs and JPMorgan will serve as the offering’s lead underwriters.

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Airbnb plans to hike its IPO price and could target a $42 billion valuation, report says

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  • Airbnb is raising the pricing range for its initial public offering to between $56 and $60 per share, the Wall Street Journal reported.
  • The home-rental platform was previously targeting a range of $44 to $50 a share.
  • The increased range means Airbnb could raise as much as $3 billion during its stock-market debut on December 10.
  • Both DoorDash and Airbnb are aiming to raise over $3 billion this month, putting them among the biggest IPOs of 2020. 
  • Visit Business Insider’s homepage for more stories.

Airbnb intends to increase the price range for its initial public offering this week to between $56 and $60 per share, according to the Wall Street Journal

It previously planned to sell shares for $44 to $50 each, meaning its new range represents a 27% increase at the bottom end and a 20% increase at the top end. The US-based home-rental company could inform investors of its updated pricing range in a public filing Monday.

Airbnb intends to sell 50 million shares via its public offering scheduled for December 10. At the top end of the new range, it would raise up to $3 billion. That would set it up for a fully diluted valuation of $42 billion, which includes securities like options and restricted stock units. 

Airbnb will list on the Nasdaq under the ticker symbol “ABNB.”

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The targeted valuation is more than double Airbnb’s most recent private valuation of $18 billion in the early weeks of the pandemic in April. It’s also a significant premium to the $31 billion price tag it secured during a fundraising round in 2017.

Food delivery firm DoorDash also upped its IPO pricing range last week. The San Francisco-based company plans to sell 33 million shares at between $90 and $95 per share, up from a prior target of between $75 and $85 per share.

DoorDash’s IPO is slated for December 8 while its trading debut on the NYSE is set to follow the next day.

The two startups aim to raise a combined $6.2 billion at the top end of their pricing ranges. This would mark a record high for December’s IPO volume, exceeding the $8.3 billion record set in both December 2001 and 2003, according to data compiled by Bloomberg.

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