Updated at 8:07 p.m. ET
A company that started as a single air mattress for rent in a San Francisco apartment is now worth $100 billion.
Airbnb made its long-awaited stock market debut on Thursday and more than doubled its offering price.
From afar, it may have appeared as a peculiar time for a lodging company to go public, as the coronavirus continues to devastate the travel and hospitality industry. Wall Street, however, has a different story to tell.
An IPO frenzy is ripping through the financial sector, which has seen more companies go public this year than any since the dotcom bubble of the late-1990s.
"The market for IPOs is red hot, so they are striking while that iron is hot," said Henry Harteveldt, travel industry analyst from Atmosphere Research Group.
Another consideration: employees have company stock that expires this year. If Airbnb continued to resist calls for it to go public, employees could have lost their chance to cash out. That, Harteveldt said, was a major issue for Airbnb.
"So they just concluded: Better to go out now," Harteveldt said.
So far at least, it appears to be a well-placed bet.
Airbnb's stocks were offered at $68 per share on Wednesday, but when it started trading on the public market Thursday under the ticker symbol "ABNB," it smashed through that price, climbing to around $144 a share.
That brought the company's value to $100 billion, or more than the combined worth of hotel chains Hilton, Marriott and Intercontinental.
Instead of ringing the bell on the floor of the Nasdaq, Airbnb released a slick video of hosts around the world ding-donging their doorbells.
"You gave us hope that the idea of strangers staying together, in each others' homes, was not so crazy after all," Airbnb co-founder Brian Chesky said in the video. "Airbnb is rooted in the fundamental idea that people are good and we're in this together," said Chesky, whose stake in the company tops $11 billion.
Airbnb's IPO comes just one day after food delivery app DoorDash went public, soaring 85% in its stock market debut.
An 80% revenue drop in two weeks
Airbnb's comeback story is remarkable. When the pandemic first struck, Airbnb's business crashed. The numbers painted a troubling picture: the company was logging more cancellations than new bookings.
"Revenues dropped 80% in the span of two weeks. And the most difficult thing was, we didn't know how long it was going to last," Airbnb co-founder Nathan Blecharczyk told NPR in an interview on Thursday. "But fast-forward to summer, folks were eager to get outside of their home."
Airbnb laid off 1,900 employees, took out billions of dollars in loans, offered hosts deep-cleaning guidance and retooled its website to promote beachfront getaways and cabins tucked away in the woods that were close by.
"So, oftentimes this just meant getting in a car and driving to a rural area," Blecharczyk said. "They like the idea of having a home all to themselves where they can be in their own bubble and have their own kitchen and prepare their own food."
The moves fueled a rebound. Airbnb bookings have not fully recovered, although the company is performing much better than most hotel chains.
The company managed to turn a profit during the third quarter of this year, but it still has never been able to make a full year profitable — and does not know if it will ever.
"We have incurred net losses in each year since inception, and we may not be able to achieve profitability," Airbnb wrote in its IPO filing.
Airbnb's pandemic support of hosts: Enough, or 'a little pittance'?
Take Louis Koorndyk, a retired Post Office worker who has two properties outside of Las Vegas he uses as Airbnb rentals.
"We're getting bookings much closer to home. People aren't necessarily flying in, especially people like to do more of a staycation," said Koorndyk, who also co-leads the Greater Las Vegas Short Term Rentals Association.
Koorndyk said guests requested the ability to work remotely from their staycation. He is advertising pandemic-era pads, after all.
"I had to really upgrade my WiFi and provide 20 feet of Ethernet cable for people doing Zoom meetings," he said.
Koorndyk has seen bookings rise about 50% since hitting bottom. He feels grateful for even the meager support provided by Airbnb, which cannot be said of all hosts.
"They're really good at saying, 'we got your backs, we're going to take care of you. We're partners in all of this.' But from a lot of hosts point of view, that's never been true, and it's never been less true than today," said Michigan lawyer Enrico Schaefer, who is representing an Airbnb host in a class-action lawsuit claiming the company has ripped off hosts during the pandemic.
Indeed, Airbnb is nothing without its 4 million hosts around the world. And many were infuriated when the company surprised them by overriding hosts' cancellation policies and fully refunding guest $1 billion worth of bookings.
Airbnb responded by setting up a $250 million fund for hosts, yet complaints persisted over reimbursement amounts that some said were inconsistent, or representing a tiny fraction of what they would typically receive from a cancellation.
"Some hosts got a little pittance back. Most hosts did not. And it was only for a very short period of time," Schaefer said.
Airbnb says it knows its fate could hinge on the happiness of its hosts. The company has made shares available to select U.S. hosts who have been active the past two years and launched a host endowment to invest in areas to directly benefit hosts.
In its IPO paperwork, Airbnb noted other future threats to the company's future prosperity, including local laws and regulations that could curb the supply of short-term rentals. In addition, the company cautioned that an uptick in listings from professional management companies could "negatively impact" the "uniqueness" of listings.
Analyst Harteveldt said some of the company's problems could collide: increased corporate ownership of Airbnbs running up against community resistance.
"Cities don't want to see apartment buildings become pseudo-hotels. They don't want to see housing stock snapped up by investors and turned around and rented on Airbnb," he said. "That's going to be a real challenge for Airbnb."