DoorDash debuted on the New York Stock Exchange on 9 December 2020 and Airbnb on the Nasdaq on the 10th. The prices they set, how far they rose on day one and why their valuations are debated.
Two platforms heavily shaped by the pandemic made their stock-market debuts in the United States one day apart: DoorDash, a food-delivery business, on Wednesday 9 December 2020 on the New York Stock Exchange, and Airbnb, a lodging-rental platform, on Thursday the 10th on the Nasdaq. Both rose sharply in their first session.
The prices and the first day
On 8 December DoorDash set a price of $102 a share, above the $90 to $95 range at which it had been marketing the shares, and sold 33 million shares, raising $3.37 billion. It trades in New York under the symbol DASH and closed its first day at $189.51, 86% above the offer price.
Airbnb launched with an initial range of $44 to $50 a share, which it raised to $56–60 a few days earlier, and finally priced at $68 on the night of 9 December. It sold just over 51 million shares, about $3.5 billion, and began trading at $146 under the symbol ABNB. It closed at $144.71, more than 112% above the offer price.
Valuation figures depend on how they are counted. At the offer price, DoorDash was worth about $38 billion and Airbnb about $47 billion, counting all shares and options, that is, on a fully diluted basis. At the close of the first session, DoorDash had a market capitalisation of about $60 billion and, diluted, of more than $70 billion; Airbnb’s was about $86.5 billion and, diluted, a little over $100 billion.
The debate over valuations
DoorDash had revenue of $1.9 billion in the first nine months of 2020, more than three times a year earlier, and lost $149 million. Airbnb had revenue of $2.5 billion, 32% lower, and lost $697 million: in April its bookings fell by as much as 72%, in May it laid off 1,900 employees, about a quarter of its workforce, and even so the third quarter ended with a net profit of $219 million.
Those who defend the valuations point to DoorDash’s growth and to how quickly Airbnb recovered. Sceptics note that Airbnb has never closed a year with a profit, that its growth was already slowing before the pandemic and that DoorDash lost $667 million in 2019. Brian Chesky, Airbnb’s chief executive, replied that he would not worry more than in April and May, when the business fell by 80% in eight weeks.
Two things are worth keeping apart. The first-day rise does not go to the company, which already received its money at the offer price, but to those who obtained shares in the offering; whoever buys afterwards does so at the market price. And a jump like that says more about demand in that session than about the value of the business, and does not foretell what will happen in the following months.
What to bear in mind
Offerings tend to be allocated mainly to institutional investors, and small savers usually gain access once the share is already trading. Those who invest through thematic or growth funds may end up exposed to these companies without having decided to, and it is worth checking what such funds hold and with what weight. Ask your adviser how it fits your case.
A brilliant stock-market debut is the start of a listed company’s story, not its verdict.
This article is general information. It is not legal, tax or investment advice, and it does not take anyone’s particular circumstances into account.
