Airbnb IPO Price Raised: What You Need to Know About ABNB Stock
The Airbnb IPO date is set for December 10, and investors are ready. But just three days before its debut, the company upped the price for Airbnb stock. Here’s everything you need to know about investing in ABNB stock.
Airbnb IPO: Stock Price, Date and Shares
On December 7, the vacation home rental company raised the Airbnb IPO price range to $56 to $60, compared to the $44 to $50 range originally planned. The move comes after DoorDash upped its offering price.
The company will offer a total of 56,551,723 shares of Airbnb stock. According to Airbnb’s amended prospectus, here’s the breakdown of the offering:
- Airbnb: 50,000,000
- Existing Shareholders: 1,551,723
- Underwriter Option: 5,000,000
However, on December 10, Airbnb stock priced at $68 a share. That puts Airbnb’s valuation close to $47 billion.
Should You Invest in Airbnb Stock?
Before the Airbnb IPO price rose, Investment U’s Technical Options Expert Bryan Bottarelli said:
“Buying anything on IPO day is always a little bit crazy, as the excitement of the IPO seems to take Wall Street by storm. But just to get a toe in the water before the ship sets sail, I’d recommend owning exposure to Airbnb anywhere between $60 and $70 per share. This represents a logical entry price to get you a “starter” position on IPO day.”
After sources confirmed the raised price, he added, “This tells you that the demand is growing – which I consider a positive signal.”
Airbnb to Use Hybrid Auction in Offering
Sources claims the Airbnb IPO will use what’s referred to as a hybrid auction. It’s a combination of the traditional IPO and a Dutch auction. The idea behind this method is to price the offering closer to market pricing, a growing criticism that the traditional IPO process shortchanges companies. Unity Software used it in its IPO led by Goldman Sachs, who is also an underwriter for Airbnb alongside Morgan Stanley.
In a hybrid auction, investors submit electronically the amount of stock they’re willing to buy and at what price. If there are bids for 100 million shares at or above the Airbnb IPO price, the company and its underwriter determine who gets allocated the shares. This benefits the company because it controls who gets the shares, often favoring long-term investors, and can better gauge the demand and performance of the offering.
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Even with a hybrid auction, the Airbnb IPO price isn’t guaranteed to match opening day. It’s still possible for Airbnb stock to kick off with a pop on December 10.
About Amber Deter
Amber Deter has researched and written about initial public offerings (IPOs) over the last few years. After starting her college career studying accounting and business, Amber decided to focus on her love of writing. Now she’s able to bring that experience to Investment U readers by providing in-depth research on IPO and investing opportunities.