Shares of Airbnb Jumped More Than 112% on Thursday

Airbnb is famous around the world as millions of people use its services every year. Interestingly, shares of the San Francisco-based company added more than 112% in its IPO debut Thursday. 

As a reminder, shares of Airbnb were originally priced at $68 Wednesday night. However, shares closed the day at $144.71 giving the home-sharing company a market cap of about $86.5 billion, more than double the valuation it sought in the IPO just a day ago. As of Thursday, the company’s market cap exceeded hotel chains, such as Marriott and Hilton, which hold market caps of more than $42 billion and $29 billion, respectively. 

It is worth noting that, the first-day surge made the home-sharing company the 10th best debut this year based on price gain from its IPO. Interestingly, Airbnb is going public at a time when the sector is struggling to get back on track. The major problem is the coronavirus pandemic. People should take into account that, its revenue shrank nearly 19% last quarter to $1.34 billion compared with the same period a year prior. Nevertheless, the company still managed to turn a profit of $219 million and has had other irregular quarters of profitability.  

Airbnb and coronavirus pandemic

The coronavirus pandemic created a lot of challenges for the tourism industry. Unfortunately, the pandemic is not over yet. It could take at least several months to distribute the vaccine around the world. 

Despite challenges, Airbnb managed to hit a sweet spot for those willing to travel even in this situation, and who preferred home stays over traditional hotels. However, that could change when vaccines make more widespread travel more accessible again, possibly as soon as next year. 

Importantly, the home-sharing company struggled with complaints from hosts on its platform early in the pandemic, when Airbnb granted leniency to guest cancellations. 

People should keep in mind that,  as part of its IPO, the home-sharing company created an endowment fund for hosts consisting of 9.2 million nonvoting shares it set aside. This fact once more underlines the strength of the company. 

This decision shows that Airbnb understands its role and is willing to support hosts around the world. The coronavirus pandemic caused serious damage to the industry. Companies should join forces with the local population to rebuild the tourism industry as soon as possible. Moreover, it has the opportunity to play an important role in this process. Airbnb should cooperate with local authorities to find the best option for each city.