Airbnb, DoorDash Boost Price Ranges Ahead of Mega IPO Week

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December is set to be the busiest year-end on record for initial public offerings in the U.S., with DoorDash Inc. and Airbnb Inc. ready to start trading this week in long-awaited listings.

The two startups, which are aiming to raise a combined $6.2 billion at the top of their price ranges, will propel the month’s IPO volume to all-time high, surpassing the $8.3 billion mark set in December of both 2001 and 2003, according to data compiled by Bloomberg. IPOs on U.S. exchanges have already raised a record $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. Airbnb increased the price range of its IPO in an updated prospectus on Monday, after DoorDash upped its own price range in a Friday filing. Airbnb will be valued at as much as $42 billion at the top end of the revised range. The elevated price targets put both companies among the five biggest U.S. IPOs of 2020.

Increasing the price range usually implies that the offering is being well-received among investors and demand is high. Companies are allowed to price their IPO shares up to 20% above the revised range without having to refile with the Securities and Exchange Commission.

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 U.S. 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 Inc., which lets online shoppers pay for purchases such as Peloton bikes in installments and online video-game company Roblox Corp. Both are likely to attain a valuation of tens of billions of dollars in its listing.

ContextLogic Inc., the parent of online retailer Wish, launched its share sale on Monday. It’s aiming to raise as much as $1.1 billion at a fully diluted valuation of $17 billion, its amended prospectus shows.

“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 $42 billion in its IPO, while DoorDash could hit a valuation of about $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 $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.

CompanyFundraising at Top EndIPO ValuationStatus
DoorDash$3.1 billion$35 billion at top of range

Pricing Dec. 8,

Trading Dec. 9

Airbnb$3.1 billion$42 billion at top of range

Pricing Dec. 9,

Trading Dec. 10

C3.ai$527 million$3.29 billion (appx.)

Pricing Dec. 8,

Trading Dec. 9

ContextLogic (Wish)$1.1 billion$17 billion at top of range

Pricing Dec. 15,

Trading Dec. 16

AffirmTBDTBDFiled publicly
RobloxTBDTBDFiled publicly

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 Inc., which has soared more than 200% since its listing to a $110 billion public market valuation. This month’s cluster of soon-to-be public entities -- all based in the San Francisco Bay Area -- 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.”

One enterprise software listing is also planned for this week. C3.ai Inc., founded by former Oracle Corp. executive Tom Siebel, is expected to raise as much as $527 million in its IPO.

Gauging Demand

Bankers are using new methods to execute these large share sales, incorporating technology under development for years that was well-timed for use during the pandemic, when potential buyers can’t meet the company executives and advisers in person.

Airbnb, DoorDash and Roblox have asked prospective IPO investors to fill in their deal orders via an online portal, indicating their level of interest at any desired price, according to people with knowledge of the matter, who asked not to be identified because the details are private.

The new process is aimed at helping issuers and their advisers gauge demand, especially for high-growth companies subject to wide differences in valuation among investors, the people said. The final price and share allocation are still determined by the seller.

Representatives for the companies declined to comment.

Unity Software Inc., used the same system in its September IPO. Unity sold its shares for $52 each and ended its first day of trading at $68.35. The shares closed Friday at $150.94 apiece.

©2020 Bloomberg L.P.

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