priced its initial public offering Wednesday night—and it went well, very well.
The company raised about $3.5 billion selling 50 million shares for $68 each. Airbnb had originally expected to sell the stock for $56 to $60 a share.
The $68 mark gives Airbnb a market value of roughly $41 billion based on the 600 million shares, give or take, outstanding after the IPO is complete.
Airbnb is selling less than 10% of its outstanding shares—most insiders and early investors in Airbnb can’t sell yet—which means that just a small fraction of stock will set billions of dollars in value.
Don’t be surprised if $68 a share proves to be too low.
which went public Wednesday, sold just 23 million of 290 million shares outstanding—and the stock raced ahead 85%, valuing the company for roughly $65 billion. A similar gain for Airbnb puts $100 a share on the table.
That isn’t a prediction. It’s an observation that investors seem to have an insatiable demand for new growth stocks in 2020, and they’re chasing too few shares.
More investors will be joining the party down the road and more shares will become available to trade. But that’s a problem for another day.
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FTC Sues to Force Facebook to Divest of Instagram and WhatsApp
- The suits claim that the social-networking giant sought to limit competition through the acquisitions of Instagram and WhatsApp and via the terms it imposes on developers of software that accesses its platform.
- Both lawsuits seek to block Facebook’s alleged activity through court orders. The federal action seeks an injunction that could, among other things, force the company to divest Instagram and WhatsApp.
- The state action asks that Facebook be prevented from making further acquisitions valued at $10 million or more without advance notice to the plaintiffs—the attorneys general in the coalition—and also the potential restructuring of Facebook’s businesses.
- “This course of conduct harms competition, leaves consumers with few choices for personal social networking, and deprives advertisers of the benefits of competition,” the agency said. In a statement, Facebook called the lawsuit “revisionist history” and said it was going to defend itself vigorously.
What’s Next: The move comes amid a broadening effort by federal and state lawmakers to pursue action against large technology companies. Investors mostly shrugged off the news. Facebook closed down 1.9% Wednesday, in line with the
—Max A. Cherney and Anita Hamilton
The Ripple Effects of DoorDash’s Blockbuster IPO
The first day of public trading for DoorDash shares wasn’t just great for the company—which raised $3.37 billion and hit a market cap of more than $70 billion—it bodes well for other food delivery and gig economy stocks too.
whose Uber Eats delivery service competes directly with DoorDash, closed up 1.5% and notched an intraday high. The company’s shares were buoyed in November when Californians approved a ballot measure letting gig companies classify drivers as contractors—which also benefits DoorDash.
agreed earlier this year to be acquired by Amsterdam-based
Just Eat Takeaway
for about $7.3 billion in stock. Both stocks ended higher Wednesday, with Just Eat Takeaway rising 7.7% in European trading, and Grubhub up 6.7%.
is a big winner with the DoorDash deal. Its Vision Fund invested $2 billion for 22% of the company, which is now worth about $11.4 billion. SoftBank stock, which also got a boost from a Bloomberg report that said it could go private, rose 5.6%.
What’s Next: Next up is Airbnb’s IPO, expected to begin trading Thursday. The company is expecting to raise more $3.5 billion with a valuation of $47 billion.
—Eric J. Savitz and Anita Hamilton
GE to Pay $200 Million to Settle SEC Probe
agreed to pay a $200 million fine to settle Securities and Exchange Commission charges the company misled investors in disclosures in its power and insurance businesses.
- The SEC said the company could have done a better job explaining accounting in the company’s power unit as well as how cash flowed between GE’s industrial and financial businesses.
- “GE’s repeated disclosure failures across multiple businesses materially misled investors about how it was generating reported earnings and cash growth as well as latent risks in its insurance business,” Stephanie Avakian, director of the SEC’s Division of Enforcement, said in a statement.
- Without admitting or denying the order’s findings, the company agreed to pay the penalty and to cease and desist from future violations, the SEC said.
What’s Next: A GE spokesperson said in a statement to Barron’s that the announcement “brings the entire scope of the SEC investigation of GE to a close, and no corrections or revisions to our financial statements are required.”
—Connor Smith and Al Root
The Boeing 737 Max Is Back in the Sky
For the first time since March 2019, air travelers are flying on the
737 MAX. Brazilian airline GOL resumed commercial flights using the plane on Wednesday, starting with a 537-mile route from São Paulo to Porto Alegre.
- The MAX was grounded worldwide in March 2019 after two crashes within six months killed 346 people.
- Boeing has since made extensive safety fixes to its flight control system and provided additional pilot training. U.S. regulators approved the plane’s return to commercial service in November.
received its first of eight MAX planes expected by year-end.
are awaiting upgraded MAX planes this month, and
plans to start MAX flights in March.
- Boeing says it has built some 450 MAX jets that have yet to be delivered.
What’s Next: Even as airlines ramp up orders for the MAX, the industry’s recovery still feels far off. Commercial air travel is currently down nearly 75% from 2019. On Wednesday,
asked more workers to take voluntary, unpaid leave because it expects the travel slump to extend into 2021.
Strong Euro Hinders ECB’s Attempt to Boost Eurozone Inflation
The European Central Bank announced Thursday another increase of its pandemic-focused asset-buying program to help support the eurozone economy hit by the pandemic’s second wave, but the strengthening of the euro against the dollar complicates its long-elusive goal of boosting inflation.
- The ECB ramped up its asset-buying program at its meeting, taking the total of its Covid-related acquisitions to €1.85 trillion. It also launched a new program to provide cheap loans to banks.
- The euro is up 13% against the dollar since its year’s low in March, and is approaching the five-year high level of March 2018.
- The ECB’s official mission is to maintain inflation in the eurozone “below but close” to the 2% level, but it has consistently undershot the target since 2014. Inflation sank in November to minus 0.3% on an annual basis.
- The ECB’s own economists forecast prices to rise slowly in the next two years to 1.3% in 2022, still significantly below the central bank’s official target.
- The higher euro makes imports cheaper, weakening inflation, and makes exported goods more expensive on foreign markets, damping the recovery of the export-dependent eurozone economy.
What’s Next: Since the strengthening of the euro is mostly due to a weakening of the U.S. dollar since the beginning of the year, there is little the ECB can do to counter the trend—and in any case, it does not target exchange rates per se in its monetary policy decisions.
What will President-elect Joe Biden’s housing policies be, and how will they reshape the country’s housing markets?
From the early days of the Democratic primaries to the debates between Joe Biden and Donald Trump, the 2020 presidential candidates spent a lot of time talking about housing—and that’s somewhat unusual.
As various Democrats jockeyed for their party’s presidential nomination in the closing months of 2019 and early this year, many of the candidates, including Biden, released ambitious housing agendas, calling for everything from a tax on real estate speculators to the construction of millions of new rental units nationwide. This summer, President Trump boasted of his administration’s decision to roll back an Obama-era fair housing rule, claiming that people in the suburbs would see higher home prices and less crime as a result.
“I’ve been involved in prior campaigns, and to get housing policy in the mix anywhere other than on the campaign’s website is usually pretty challenging,” Jim Parrott, a nonresident fellow at the Urban Institute, said, commenting on how rare it is to see housing as a core policy issue that candidates discuss regularly.
Since winning the election, Biden has continued to speak out on housing-related issues. While announcing his choice to nominate Janet Yellen as his Treasury secretary, Biden made note of the uneven economic recovery from the pandemic and how that has played out in terms of housing.
“Like the two lines coming out of a K, some people are seeing their prospects soar up while most others are watching their economic well-being drop sharply,” Biden said. He later said that luxury home sales were up 40% from last year, yet one in six renters were behind on their rent payments as of October.
So what can Americans expect out of the Biden administration in terms of housing policies? Here’s what the experts say.
Read more here.
—Newsletter edited by Stacy Ozol, Mary Romano, Anita Hamilton, Matt Bemer, Ben Levisohn