Two of the Biggest Tech IPOs of 2020: Airbnb and DoorDash

Back in late October, we discussed how 2020 was a historic year for SPACs. You may recall that a SPAC (Special Purpose Acquisition Company) is a tool that institutional and individual investors can use to take a company public. Well, between the popularity of SPACs and traditional IPOs (initial public offerings), we’ve seen a record number of companies enter the market in 2020.

This year, there have been more than 450 IPOs, far exceeding the previous record of 397 set in 2000.[1]

The sheer volume of IPOs in 2020 has also raised hundreds of billions of dollars. According to Kathleen Smith from Renaissance Capital, “If you combine IPO and SPAC volume of $130 billion, these numbers exceed anything we have seen since the internet bubble.”[2]

Interestingly, it’s also worth mentioning that three of the ten biggest tech IPOs occurred in 2020. When you consider the chart below, you can see that the IPOs of Snowflake, Inc. (SNOW), Airbnb, Inc. (ABNB), and DoorDash, Inc. (DASH) raised $11 billion this year.[3]

Today, let’s take a closer look at two of these recent IPOs: Airbnb and DoorDash.

Simply put, Airbnb is a home-sharing platform. Travelers can step outside of the traditional hotel room stay and instead choose to lodge in a much more unique setting, which can range from reserving a room in a person’s home to renting a whole house, cabin or apartment. For those looking for an authentic one-of-a-kind experience, Airbnb also has listings for castles, yurts, treehouses, lighthouses, igloos, and even private islands!

According to the Airbnb website, the home-sharing platform has nearly six million active listings in 100,000 cities in more than 220 countries and regions worldwide. More than four million people serve as Airbnb hosts, with more than 800 million guests.

Given the global COVID-19 pandemic this year, travel has been minimal—and that’s hurt a lot of companies that operate in the hospitality industry. But that didn’t prevent Airbnb from filing its IPO this year. And based on the stock’s stunning first-week performance, Wall Street expects the world to resume traveling and booking stays through Airbnb once restrictions are lifted, and the vaccine is distributed to the high-risk populations.

Airbnb’s debut on the U.S. stock exchange was on December 10. The IPO price was $68, and the stock soared 112% on its first day of trading. Airbnb raised $3.7 billion, and it now has a market cap of around $77.7 billion.

DoorDash’s IPO was equally impressive.

Now, DoorDash has benefited immensely from the global pandemic, with revenue surging 226% in the first nine months of 2020. The company partners with restaurants that don’t traditionally offer delivery services, and its “Dashers” provide the door-to-door delivery. So, consumers have had access to more than just pizza and Chinese food delivery during the pandemic. DoorDash helps meet all your cravings, from Mexican to Thai to Italian to burgers.

DoorDash has grown to become a leading food delivery service in the U.S., with operations in most major cities, including New York City, Chicago, Las Vegas, Los Angeles, San Francisco, Washington D.C., San Diego, Brooklyn, Miami, Seattle, Atlanta, Phoenix, Houston, Denver, Detroit, and Philadelphia.

DoorDash’s IPO took place on December 9. The IPO price was $102, and the stock jumped 86% on its first day of trading. DoorDash raised $3.4 billion, and it now has a market cap of $50.8 billion.

There’s been a lot of excitement around Airbnb’s and DoorDash’s recent IPOs, but many are wondering if they’re all hype and very little substance. The reality is that we don’t know when folks will feel comfortable to travel again, and DoorDash has fierce competitors from companies like GrubHub.

Personally, before I’d even consider dipping my toes into these red-hot IPOs, I’d want a closer look at their top and bottom lines—and if they have a viable business in a post-pandemic world. If you would like to learn more about our view on Airbnb, DoorDash, and other recent IPOs, give me a call today.

Please click here for important disclosures.

[1] https://stockanalysis.com/ipos/statistics/#:~:text=There%20have%20been%20453%20IPOs%20in%202020%20so%20far.

[2] https://www.cnbc.com/2020/12/07/the-2021-outlook-for-the-booming-spac-market-and-traditional-ipos.html

[3] https://www.cnbc.com/2020/12/12/10-biggest-tech-ipos-ever-three-in-2020-two-last-week.html