Why it is necessary to split the shares in the case of Airbnb
Service booking accommodation Airbnb plans to make an initial placement. And before the procedure, the company must perform a split of shares, when one paper is divided into two. Such an operation is carried out in the interests of IPO participants, it allows reducing the value of shares. The latter have significantly increased in price in a short time.
Split will take place in the proportion of 2:1, and after the split the price of securities will proportionally decrease. One share will be split into two, and its buyer will receive additional paper. This will make the shares more accessible on the one hand and increase the number of buyers on the other.
The last time Airbnb filed a financial report was at the end of Q2 last year. During this time, the company’s shares have increased in value by 10.4%. In the second quarter, the price of paper was 63.5 dollars, and now it is estimated at 69.8 dollars. Split will give an opportunity to sell shares for 34.8 dollars.
According to the plans of the service, the initial public offering should bring about $3 billion. The evaluation of the securities, which are not presented at the exchange, is carried out by the experts, who control the implementation of the rules of trading operations. In most cases, the lower value of the range is used. It differs from the results of the market analysis of venture companies, where the alignment of the value is with the startup itself.
An IPO application from Airbnb was submitted to the SEC in summer 2019. Initially, management had planned to conduct an initial public offering in March 2020, but the pandemic forced them to re-prioritize and postpone the procedure. As a result of the pandemic, the number of rental orders in the service decreased by 90% and revenue in the second quarter decreased by 67%. However, Airbnb managed to recover rather quickly after the end of the pandemic, and the current situation to some extent even played into the hands of the company. Now many people prefer to stay not in hotels or large resorts, where there are a lot of people, but in small houses in the countryside or cozy apartments, where you can work remotely.
After the decline in the second quarter, the positive dynamics became noticeable in June, when the number of bookings began to grow, and compared to the same period in 2019, the decline was observed at 30%.
Airbnb is an online platform where homeowners can rent out their accommodation, either as a whole or by providing one room for overnight stay or for a longer period of time. The service itself helps in communication between the owner of the apartment or house and the guest, and also takes care of the payment. On the website of the company it is possible to rent out or rent a house in 65 thousand cities in 191 countries.