Report: Airbnb, DoorDash aiming for loftier than expected valuations

Written by: Jayson Derrick
November 30, 2020
  • Both Airbnb and DoorDash are looking to price its IPO and list its shares before 2021.
  • Airbnb's valuation is roughly flat versus 2017 while DoorDash's valuation has soared over the years.
  • Both companies saw COVID-19 related tailwinds.

Two of the most anticipated IPOs for the end of 2020, Airbnb and DoorDash, could come at a higher price to investors, according to The Wall Street Journal

Lofty valuations

Vacation rental online marketplace company Airbnb hopes to value itself between $30 billion and $33 billion ahead of a late 2020 initial public offering, sources close to the matter told WSJ. The company plans on kicking off its investor roadshow this Tuesday and will try and convince investors why it should command a premium of up to 10% versus expectations of a $30 billion valuation.

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Similarly, experts were expecting the food delivery platform DoorDash to be valued at $25 billion. But the company is confident it can fetch a valuation of at least $25 billion and up to $28 billion.

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COVID beneficiaries

Airbnb’s model of helping homeowners and real estate investors rent their property out for short-term stays has proven to be a winning proposition amid the COVID-19 pandemic. Consumers that decided to travel opted to stay in an empty house or apartment instead of a hotel where they could come in contact with other people.

Similarly, DoorDash has seen a surge in demand as restaurants across the world were forced to close or suspend in-person dining. Consumers with a craving for restaurant food had no other option but to get a meal themselves or through the more convenient method of ordering online for delivery via a third-party app.

Opposite valuation movements

Airbnb was valued at $31 billion back in 2017 which implies at the low end the company is less valuable today. However, the company saw its valuation plummet to as low as $18 billion in 2020 when all travel came to a sudden halt. 

On the other hand, DoorDash was valued at a mere $1.4 billion in 2018. As the company commanded a greater market share of the U.S. food delivery space, it’s valuation rose to more than $15 billion in 2020.

However, DoorDash’s IPO process is unique as investors will place orders for various amounts of shares at different prices, according to WSJ. The company and its financial advisors will use the crowd-sourced data to price the IPO deal and allocate the shares accordingly.

The timeline

Both Airbnb and DoorDash are hoping to price its IPO and list its stock on a public exchange before the end of 2020, according to WSJ. This goes against the historical norm of December acting as a relatively quiet month on the trading and new listing front.

But both companies could be looking to capitalize on soaring valuations investors are valuing tech companies at. The Nasdaq Composite Index is trading at all-time highs while the S&P 500 index recorded its 26th record close of the year on Friday. The Dow also surpassed the 30,000 level for the first time ever.