Tonight, the Airbnb IPO could value the guest hosting juggernaut at $56.5bn

Airbnb is getting ready to list on the Nasdaq exchange on Thursday, marking one of the year’s most keenly anticipated IPOs for the US share markets and a remarkable turnaround for the guest accommodation website company.

Held over from earlier in the year because of the COVID-19 pandemic, the IPO could value the company at around $US42bn ($56.5bn), according to market experts.

“We have found that investors typically prefer to invest in stocks they know and are familiar with, so this IPO from Airbnb is one that has been hotly anticipated throughout 2020,” said eToro market analyst, Josh Gilbert.

Airbnb’s IPO is currently priced at $US56 to $US60 per share ($75.35-$80.75/share), up from a $US44 to $US50 per share valuation at the start of the week, and its final IPO share price will be revealed on Wednesday evening US time.

“Airbnb has a lot of potential to grow even further after its IPO,” said Gilbert.

Low overheads, scope for business expansion

The company has low overheads, as unlike a hotel chain it does not own physical buildings, which means it can keep costs low and continue to develop and expand its business.

The type of accommodation advertised on Airbnb’s website and offered to guests is less formal than a hotel, and includes castles, cabins, farms, boats and treehouses.

Airbnb accommodation providers are known as hosts, and hosting is the centrepiece of the Airbnb experience.

“Airbnb enables hosts to provide guests access to a vast world of unique homes and experiences that were previously inaccessible, or even undiscovered,” said the company in its IPO prospectus.

Revenue for the company was its second largest ever in Q3 2020, at the height of the COVID-19 pandemic worldwide, and Airbnb has apparently had a quicker recovery than other accommodation type businesses, said eToro.

“If they can deliver that in the middle of a pandemic, its sales growth for 2021 looks bright,” said Gilbert.

Airbnb to benefit from looser travel restrictions

Airbnb could receive a boost if vaccines bring an end to the COVID-19 pandemic, and result in a loosening of international travel restrictions, although this may take some time.

“With vaccine hopes continuing to grow every day, and with the US FDA meeting Thursday to discuss Pfizer’s vaccine, it is likely we could see international travel appear sooner rather than later,” said Gilbert.

Australian investors are increasingly looking for investment opportunities in US stocks, and added to this, many are familiar with Airbnb or have booked accommodation through its website.

Since its early beginnings in San Francisco in 2008, Airbnb has grown into a website with 5.6 million accommodation listings in 100,000 cities and 220 countries, according to its website.

Airbnb accommodation providers have earned $US110bn from 800 million guest stays to date.

Trading platform eToro has seen a 480 per cent increase in registered users in Australia this year, compared with the corresponding January to November 2019 period.