What's going on?

It�s about to be a beautiful day in a whole new neighborhood for Airbnb: the vacation rental marketplace filed papers for its long-awaited initial public offering (IPO) this week.

What does this mean?

The filing was confidential, so we won�t get to take a look at the company�s much-discussed financials for a while yet. But it goes without saying that the pandemic-driven collapse in vacation travel has hit the company hard: it shored up its finances in April by raising $1 billion, and let go of 25% of its staff a month later.


Now though, as travel starts to come back(ish) and staycations boom in popularity, Airbnb looks like it�s on surer footing � hence the IPO. Its filing suggests the rental marketplace could �go public� by the end of the year, but there�s no detail on how many shares it�ll sell and at what price. And given that Airbnb went from a $31 billion valuation in 2017 to just $18 billion in April, those are the questions on every investor�s lips.

Why should I care?

For markets: Roommate wanted.

Airbnb was reportedly considering a �direct listing�, which partly cuts investment banks out of the process and doesn�t actually raise any money from the sale of new shares. An IPO, on the other hand, typically sees banks �underwrite� and �stabilize� new shares, which means they buy up any unwanted ones to keep their price from falling too far. Given the still-uncertain future of travel, Airbnb might�ve opted for the latter so it�d have flexibility to raise more money if it needs to � as well as a safety net in case markets get volatile.

For you personally: Renter�s remorse.

Just a heads up: the average day-one rise of a new stock in the US is 18%, but most of that benefits existing investors as new ones drive up the stock price (tweet this). What�s more, 60% of IPO stocks will be trading below their initial price five years down the line.