Airbnb Inc. is forgoing a traditional initial public offering (IPO) in favour of a more unconventional direct listing on stock exchanges.
The Wall Street debut of the home sharing company is slated for early 2020, but San Francisco-based Airbnb has announced that it will undertake a direct listing rather than an IPO when it makes it debut on global stock markets.
A direct listing allows companies to lower the millions of dollars they typically pay to investment banks in underwriting fees, because they don’t issue any new shares and don’t raise any new capital. Instead, they let the market choose the price. Slack Technologies Inc. (NYSE: WORK) and Spotify Technology (NYSE: SPOT) have each gone the direct listing route in recent years.
An IPO would also force Airbnb to open its books to investors. The We Co., which was supposed to have an IPO this fall, had to withdraw its plans after some investors took a look at its financials and were highly critical. Amid the ensuing scrutiny, the CEO was forced to resign.
With a private valuation of $31 billion U.S., Airbnb is expected to be one of the most high-profile companies to go public next year. Airbnb executives have been talking about an IPO since at least 2018 and the extended timeline has caused tension inside the company.
Last summer, a handful of former employees sent a letter to Airbnb’s founders pleading for a public offering so they could sell their stock options -- some of which start expiring in November 2020.
