Airbnb, DoorDash Aim for Higher-Than-Expected Valuations Ahead of Debuts
Airbnb plans to target a range of around $30 billion to $33 billion, while DoorDash will seek a valuation of around $25 billion to $28 billion
Airbnb Inc. and DoorDash Inc. are planning to release higher-than-expected valuation ranges for their initial public offerings, in the latest sign of strength in a booming market for new issues.
Airbnb is planning to target a range of around $30 billion to $33 billion—using a fully diluted share count—when the home-rental startup kicks off its investor roadshow Tuesday, according to people familiar with the matter. That is greater than $30 billion people close to the offering had expected.
DoorDash, meanwhile, plans to target a range of around $25 billion to $28 billion on a fully diluted basis, excluding the more than roughly $3 billion in cash and proceeds expected after the IPO. That is greater than the $25 billion people close to the offering had expected. DoorDash’s roadshow is expected to begin Monday.
Typically companies and their underwriters seek to set relatively conservative initial ranges, with room to potentially price the shares at the high end or above them before trading starts.
It isn’t clear what per-share price ranges the companies will disclose.
Airbnb and DoorDash are on track for listings in mid-December—typically a quiet month for offerings, ending a banner year for IPOs with a bang. There has already been a record amount of money raised in new issues on U.S. exchanges as soaring technology valuations entice a raft of private companies to join the public markets.
Activity has been buoyed by the record-setting run for the stock market. The Nasdaq Composite hit a new closing record on Friday during a holiday-shortened trading session. The broad S&P 500 notched its 26th record close of the year Friday, and the Dow Jones Industrial Average vaulted above the 30000 mark for the first time last week.
So far this year, more than $140 billion has been raised in 383 initial public offerings on U.S. exchanges, far exceeding the previous full-year record high set at the height of the dot-com boom in 1999, according to Dealogic data that dates back to 1995.
Both Airbnb and DoorDash have weathered the coronavirus pandemic as more people shun hotels in favor of houses for vacations or longer-term stays, and order out to avoid restaurants.
Airbnb was valued at $31 billion in a 2017 investment round. The San Francisco company’s valuation fell to $18 billion when bookings plummeted at the outset of the pandemic as travel came to a virtual standstill.
Airbnb Chief Executive Brian Chesky quickly borrowed $2 billion, slashed marketing spending, laid off a quarter of the company’s staff and put many noncore projects on hold. Bookings at Airbnb rebounded by summer, though nowhere near pre-pandemic levels, as people increasingly seek houses for local getaways.
For DoorDash, a valuation of more than $25 billion would continue what has been a sharp upward march. San Francisco-based DoorDash’s private valuation had already ballooned to more than $15 billion this year from just $1.4 billion in 2018 as it took an even greater share of the U.S. food-delivery market. It is now the biggest player in the sector.
DoorDash will take a relatively new tack in determining the price of its IPO. Working with its underwriters, the company will ask investors to put orders into an online platform built by Goldman Sachs Group Inc. Investors will be asked to place orders for various amounts of shares at different price points. DoorDash and its bankers will then use those bids to price the deal and allocate the shares. Typically, underwriters set pricing based on more generalized feedback on investor demand.
For both companies, their roadshows will look different than they would have in the pre-Covid-19 world. Executives at both companies will market their offerings to mutual funds and hedge funds in Zoom meetings rather than in a whirlwind tour across the country.
Both companies and their respective underwriters will set their final IPO prices based on feedback from investors in the roadshows. Morgan Stanley and Goldman Sachs are leading Airbnb’s IPO, while Goldman and JPMorgan Chase & Co. are leading DoorDash’s.
Corrections & Amplifications
The S&P 500 notched its 26th record close of the year on Friday. An earlier version of this article incorrectly said the S&P 500 was near a record. (Corrected on Nov. 29)