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The Airbnb company logo.

Stocks for Airbnb shot up in the company’s day of public trading, even amid a coronavirus pandemic that has decimated the travel and hospitality industries. 

The company’s shares opened at $146 each Thursday, a 115 percent rise over its initial offering price of $68, making its market capitalization come out to roughly $101.6 billion. 

Airbnb’s is the latest tech I.P.O. of the last year to make a splash, delivering a windfall for Silicon Valley investors and employees. It’s valuation now is greater than that of rideshare giant Uber, and the total $3.5 billion its offering raked in made it the biggest I.P.O. of 2020. 

“Airbnb’s strong debut comes as little surprise in view of the enormous valuations accorded to anything ‘tech’. After all, the company is nearer to profit than many recent and current IPOs,” said John Colley an associate dean at Warwick Business School and an I.P.O. expert.

“However, those prices are a consequence of growth rates, rather than the likelihood of consistently making significant profits,” he added. “Airbnb has been spending significantly to increase growth rates ahead of the IPO and attempting to reduce criticism in relation to safety, fraud and product descriptions.”

Airbnb’s Thursday success comes after months of scrambling to recoup losses from the coronavirus pandemic. It brought in $2.5 billion in revenue in the first nine months of 2020, a $1.2 billion drop from the same time period a year earlier, and it lost $697 million during that time. It also was forced to lay off thousands of workers and delay its planned I.P.O. rollout.

To turn its fortune around, Airbnb offered an economic stimulus and a reprieve from pandemic-fueled loneliness, according to The New York Times, which first covered Airbnb’s offering.

“Travel is enduring because it is fundamentally about human connections. And while travel is changing, human connections are now needed more than ever,” Airbnb said in a press release

However, the success of Airbnb’s I.P.O. and those of other tech firms has observers scratching their heads. Low interest rates and a stimulus-fueled economy combined with a staggering number of unemployment claims have led some to question if sky high valuations of some companies are grounded in reality. 

“There obviously is a tremendous amount of enthusiasm,” Scott Kessler, an analyst at the research firm Third Bridge, told The Times. “It’s just hard to really feel comfortable and confident about valuation levels.”

Tags Airbnb travel Uber Valuation

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