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Airbnb confidentially files for IPO

Home rental company Airbnb confidentially filed for an initial public offering on Wednesday. Yahoo Finance’s On The Move panel discuss.

Video Transcript

ADAM SHAPIRO: Welcome back to Yahoo Finance "On the Move." Yesterday we had the CEO from Vrbo on, talking about the rental market for those kinds of rentals. Then we got news that Airbnb is actually making a move for its IPO. Dan Roberts joins us now with the latest on that.

DAN ROBERTS: Well, Adam, we knew this was coming, right? And we've all been anticipating this. Now, what's remarkable to me-- Airbnb hammered by the pandemic, which, of course, is to be expected. The whole hotel industry has been.

We saw Bloomberg leaking some of those numbers just two weeks ago, saying that Airbnb in Q2 had its revenue down 70% to about $330 million in the quarter. That's from $1 billion in revenue a year earlier in the second quarter. But it doesn't seem to matter. The company is going public anyway, surprise, surprise. And I think you're going to find that the markets are very willing to be patient with these money-losing unicorns.

Now what's interesting there is it really comes down to a larger debate that so many different companies are involved in right now, which is how soon do you think things are going to recover after the pandemic? Because travel is still very much not a thing. Now, granted, in the summer, some people in some states are beginning to kind of venture out.

We had our colleague Zack Guzman reporting last week that road trips are going to be about 90% of the summer travel that Americans do. So I imagine lots of those people will be considering Airbnbs, or maybe they'll be considering boutique hotels. So you'll start to see hotels come back a little bit.

But this IPO is likely to be big and much-hyped, even though this company, really, in the last two quarters is very much struggling. Let's mention, by the way, that the valuation most recently, down to $18 billion-- ugh, only $18 billion-- from $31 billion before the pandemic. So there are some trouble spots here. But I imagine the IPO is still going to do pretty well, because that has been the trend most recently.

JULIE HYMAN: Dan, speaking of which, I'm really curious to see what the pricing of this one is going to be. Where are they going to price it, what kind of pop they're going to sort of try to engineer on that first day? Because, to your point, yes, we've had some busts recently in terms of first-day action in IPOs. Rocket, the insurance company, is one example.

But particularly for software-as-a-service IPOs that we've seen recently and sort of other tech kinds of IPOs, we've seen big day one reactions. And so Airbnb being much hyped as it is-- I mean, it's always difficult to predict how these things are going to go. But I'm going to be watching that part of it quite closely.

DAN ROBERTS: Well, absolutely, Julie. And let's also make sure we mention, this was thought to be a company that was a very likely candidate for a direct listing, because it kind of really lowers the hype-- no roadshow, none of the song and dance, and it's a little bit of a way to go public more quietly. Of course, hard to imagine Airbnb going public quietly. But the direct listing, which Slack took that route. And really, Airbnb was thought to do that.

Now, of course, it sure looks like it's going to be a traditional IPO. So right, where will they price it? And then how will it do on day one? But, of course, so much will be made of how it does on day one. And that's not what's going to matter in the end.

These employees, the executives, and the investors would like their big liquidity event. And they're going to get it. And again, it's just ironic to me, because you're going public at a time when your industry has been hammered.

But you know what? DraftKings did the same thing in April. DraftKings went public, of course, by merging with an SPAC. And that was at a time when sports, which its whole business revolves around, were completely shut down. Fast Forward-- so about a few months later, fast forward, sports have returned. And that company's stock has done very, very well. All the gaming stocks have done well.

So Airbnb's interesting, not only because where will it price as a tech play, as a software play, as you said, but it's also really in this hotel industry. There are a lot of different ways to label Airbnb. So it's going to be fascinating.

And then one other thing I'd mention, I would bet Airbnb is looking to hurry up and go public this year before the volatility we expect with the election. And we've seen a number of companies suddenly say you know what? We'd like to go public right now before the election.