One stunning Airbnb chart perfectly encapsulates the ongoing IPO-market frenzy

Business Insider / Joe Ciolli / data from Bloomberg
  • Airbnb’s post-IPO rally pushed its market cap to more than triple the valuation it garnered from its Series F funding round in 2016 and roughly five times where it sat earlier this year.
  • The company’s first day of public trading lifted shares as high as $US165 from their IPO price of $US68. By the time markets closed, Airbnb’s market valuation sat above $US100 billion.
  • The rally is being regarded as a sign of possibly irrational euphoria in the stock market.
  • Investors need to differentiate “between a great company and a great price or value,” Rich Steinberg, the chief market strategist of The Colony Group, told Business Insider.
  • Watch Airbnb trade live here.

Airbnb’s market debut left CEO Brian Chesky speechless and saw shares more than double from their initial-public-offering price. The one-day pop captures only part of the company’s parabolic leap in valuation.

The home-sharing service traded as high as $US165 when it debuted on the Nasdaq exchange. By the time markets closed on Thursday, shares sat 113% higher than their IPO price and Airbnb boasted a market valuation of more than $US100 billion.

The rally is being regarded as a sign of overwhelming — and possibly unsustainable — exuberance among investors. Airbnb’s Series B funding round in 2011 valued the firm at just over $US1 billion. Its Series F round in 2016 price pushed the startup’s valuation above $US30 billion before the coronavirus dragged that sum as low as $US20 billion.


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The IPO price of $US68 would have boosted the company’s valuation to roughly $US40 billion. Yet Airbnb’s market debut quintupled its valuation from levels seen just months ago.

“It’s silly season,” Rich Steinberg, the chief market strategist of The Colony Group, told Business Insider. “Investors need to distinguish the difference between a great company and a great price or value.”

Airbnb isn’t the only newly public company thriving amid outsized investor demand. DoorDash closed 86% higher after it began trading on Wednesday. The company’s current market cap of roughly $US54 billion is more than three times larger than the $US15 billion valuation it garnered in the private market earlier this year.

“You have speculators rotating out of names and playing the Wall Street casino. This is indicative of that behaviour,” Steinberg said.


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