These Airbnb hosts earned more than $15,000 on Thursday after the company let them buy IPO shares

A girl talks on the cellphone at the Airbnb workplace headquarters in the SOMA district of San Francisco, California.

Gabrielle Lurie | Reuters

Since beginning as an Airbnb host in 2016, Travis Schurr has turn out to be a mainstay on the website, itemizing more than 20 homes in the Las Vegas space. He started when considered one of the properties in his home-flipping company did not promote, so he turned it right into a short-term rental.

Now, Schurr and his spouse, Janie, are amongst Airbnb hosts making a living from an enormous first-day pop in the company’s IPO. In its public debut this week, Airbnb put aside as much as 3.5 million non-voting shares for hosts, accounting for as a lot as 7% of the complete providing.

Schurr, 45, stated he is by no means been in a position to buy into an IPO earlier than and referred to as the choice a “no-brainer” given what he is aware of about how they sometimes carry out. He gladly purchased 200 shares, the most out there to him, for $68 apiece, anticipating a big pop when buying and selling began on Thursday.

“All the fundamentals are out the window,” Schurr stated, citing IPOs like DoorDash, which surged 86% in its debut on Wednesday. “When you’re allocated shares in an IPO and you can get in, nine times out of 10 everybody’s getting in if you have the money.”

Schurr’s $13,600 preliminary funding is price $28,942 after Airbnb spiked 113% to shut at $144.71. He had pre-registered to buy 275 shares, the most allowed, however was knowledgeable Wednesday evening that he was solely allotted 200. Other hosts instructed CNBC the identical factor occurred to them.

At the shut of buying and selling on Thursday, Airbnb had a market cap of $86.5 billion on a non-diluted foundation, more than resort chains Marriott, Hilton and Wyndham Hotels mixed. Airbnb raised at the very least $3.four billion in the IPO, amongst the most ever for a U.S. tech company.

Airbnb did not say what number of hosts participated in the IPO or if it totally allotted the 3.5 million shares. Assuming 200 shares was the most allotment, the company might have issued that quantity to as many 17,500 of its more than four million hosts.

To be eligible, hosts needed to be based mostly in the U.S. and lively on the platform in 2019 or 2020, accepting a reservation by Nov. 1. Participants instructed CNBC they have been knowledgeable of the program on Nov. 16, and had till Nov. 20 to pre-register. Seniority helped decide who obtained into the providing.

“If demand for the program exceeds capacity, we may invite hosts to participate based on tenure, as determined by the year they first hosted on Airbnb,” the company stated in its prospectus.

Getting past Wall Street

By opening up a chunk of the IPO to hosts, Airbnb added a twist to the first-day IPO pop, an occasion that the majority typically advantages giant cash managers who’ve shut relationships to underwriters like Morgan Stanley and Goldman Sachs, the two corporations that led Airbnb’s providing.

Airbnb caught to the basic IPO playbook, however made some tweaks round the edges. It mimicked a technique used earlier this yr by Unity Software and likewise DoorDash, holding a hybrid public sale that let executives solicit bids from buyers and select a value based mostly on the place they landed. It additionally allowed workers with vested shares to promote a portion of their fairness in the IPO fairly than having to attend for the lock-up expiration.

Airbnb is not the first company to open its IPO to associate companies. In Uber’s IPO final yr, the company put aside as much as 3% of the 180 million shares for drivers. The funding has up to now not paid off very nicely: Uber debuted at $45 in May 2019, after which traded under the IPO value till final month. It’s now at $54.35, representing a 21% enhance from the IPO, whereas the S&P 500 is up 27% over that stretch.

Even with the company’s blockbuster IPO, Airbnb hosts have had a tricky yr in the pandemic. Because of the plunge in tourism, Airbnb’s gross reserving quantity tumbled 39% in the first three quarters of 2020 from a yr earlier to $18 billion, and the decline is anticipated to proceed via the yr.

Airbnb did not assist itself with the approach it responded to cancellations. In the preliminary weeks after Covid-19 hit the U.S., it gave vacationers refunds, leaving hosts at a loss. In March, Airbnb put aside $250 million to compensate property house owners for missed stays, however by the following month a whole lot of hosts have been complaining in on-line boards that they hadn’t acquired any compensation and even follow-up communications.

While an IPO allotment to a small share of hosts will not make up for a yr of economic struggles skilled by so many individuals who relied on the website for earnings, Airbnb optimists like Richard Fertig say the IPO displays brighter days forward for the enterprise.

Richard Fertig

Source: Richard Fertig

A former hedge fund supervisor, Fertig lives in Jackson Hole, Wyoming, and is now a full-time actual property proprietor, with boutique resorts in Costa Rica, Palm Beach, Florida, and Palm Springs, California. He’s been itemizing properties on Airbnb for about eight years, and says he has thousands and thousands of {dollars} in actual property tied to short-term leases.

Like Schurr, Fertig signed as much as buy 275 shares and was in the end awarded 200.

“I think it will be a very popular and successful IPO,” Fertig stated, in an interview on Wednesday, earlier than the providing. “We’ll have a very nice initial bump but I also think the business has very strong legs going forward because of the rate of adoption and growth and use.”

‘Experience trumps luxurious’

Fertig, who teaches YouTube programs about Airbnb and short-term leases, stated his enterprise slumped from March via early June, however picked again up in the summer season and hasn’t let up since. Travelers have flocked to seashore cities and rural getaways for household holidays and to work remotely, enjoying proper into Fertig’s candy spot.

“The world today is more about experiences,” Fertig stated, from his Costa Rica resort. “Experience trumps luxury.”

Property house owners weren’t the solely ones who obtained to take part in the IPO. Daniel Chan, a Bay Area magician who usually entertains techies, performs exhibits as a part of Airbnb Experiences. He’s completed magic for C-level executives at the company and has been reserving exhibits via Airbnb for about 4 years.

Daniel Chan is amongst quite a few small-business house owners who rely on the tech business’s events and conferences and are actually gazing clean calendars with no concept of when they are going to be capable to return to their livelihoods.

Courtesy of Daniel Chan

Speaking on Thursday, simply earlier than beginning a present on Zoom, Chan, who promotes himself as “the billionaires’ magician,” stated he was allotted 200 shares. He, too, initially registered for 275 when the value vary was $44 to $50.

Chan stated he obtained nervous when the vary ticked up and stated he was upset when it jumped to $68 as a result of he thought it might be a lot tougher to generate beneficial properties. He’s stunned how mistaken he was.

Now, the query for Chan is how lengthy to carry. He has restricted IPO investing expertise, although he stated he is bought inventory in corporations that employed him, together with one share of Google each time he carried out for the company. He now owns over $100,000 price of Alphabet inventory.

During the pandemic, a lot of Chan’s enterprise has come via Airbnb — he stated he has 22 digital exhibits lined up this month. While Chan likes the concept of backing the company that is supporting his enterprise, he is been round Silicon Valley lengthy sufficient to see some ugly implosions.

“I might sell slowly, but my wife is saying don’t sell at all,” stated Chan, including that the capital beneficial properties tax he faces is a cause to face pat. “I don’t think it will ever be, but you’ve seen stocks go down so it’s a really iffy thing.”

WATCH: Airbnb opens at $146

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