NEW YOEK – December is set to be the busiest year-end on record for initial public offerings in the US, with DoorDash and Airbnb ready to start trading this week in long-awaited listings.
The two start-ups, which are aiming to raise a combined US$6.2 billion (S$8.3 billion) at the top-end of their price ranges, will propel the month’s IPO volume to all-time high, surpassing the US$8.3 billion mark set in December of both 2001 and 2003, according to data compiled by Bloomberg. IPOs on US exchanges have already raised a record US$156 billion this year, the data show.
Both listings got an additional boost as the companies headed into the final stretch of marketing their shares. DoorDash upped the price range for its stock in a Friday filing, while Airbnb is planning to follow suit and increase its price range ahead of its IPO, people familiar with the matter said on Sunday (Dec 6). The companies are now each expected to raise as much as US$3.1 billion, putting them among the top five biggest US IPOs of 2020.
Private companies that sat out the market chaos in the early days of the Covid-19 pandemic – and were awaiting a final outcome in the US election – are now rushing to go public. Airbnb and DoorDash will quickly be followed by three other mega-listings that could add billions of dollars to the IPO tally.
Also on deck to go public this month are Affirm Holdings, which lets online shoppers pay for purchases such as Peloton bikes in installments, online video-game company Roblox Corp and ContextLogic, the parent of discount online retailer Wish. Each is likely to attain a valuation of tens of billions of dollars in its listing.
“This group of companies that you have coming out now maybe weren’t thought of initially as benefiting, but they’ve been able to show very strong results despite the coronavirus,” said Karen Snow, head of East Coast listings at Nasdaq Inc.
Airbnb is aiming to be valued at as much as US$42 billion in its IPO, while DoorDash could hit a valuation of about US$35 billion, based on their updated price ranges. For DoorDash, that’s more than double the private valuation it hit in a June fundraising round, after it seized on the pandemic-fueled boom in demand for meals brought to your door. Airbnb had been valued at US$18 billion in April after raising additional debt to shore up its finances. The company, which was initially hit hard by global travel restrictions, has more recently seen a boom in customers seeking longer-term, domestic rentals.
Airbnb’s IPO will also be a lucrative event for many of its employees. The company has offered billions of dollars worth of stock compensation to staff, similar to Uber Technologies Inc. and other large venture-backed companies that have gone public. The IPO will make some of its longtime employees millionaires on paper.
Time and cash
Earlier this year, technology IPOs were dominated by enterprise software companies such as Snowflake, which has soared more than 200 per cent since its listing to a US$110 billion public market valuation. This month’s cluster of soon-to-be public entities cater to consumers stuck at home with extra time and cash on their hands.
Should the listings go well, it could signal investors are optimistic about an economic rebound after the dark days of the pandemic.
“There’s a lot of support and interest from institutional investors for companies that are impacted by Covid because the feeling is that they will recover,” said Neil Kell, Bank of America Corp’s vice chairman of global equity capital markets.
“The mindset is not that we’re in December of 2020,” he said. “The mindset is how is it going to look a year from now.”