Morgan Stanley, Goldman Sachs poised to lead Airbnb’s listing -sources

Oct 2 (Reuters) – Short-term home rental company Airbnb Inc
is set to hire Morgan Stanley MS.N and Goldman Sachs Group Inc
GS.N as joint lead advisers on its planned stock market
flotation next year, people familiar with the matter said on

The appointments would represent another high-profile
assignment for the storied investment banks, albeit potentially
less lucrative than usual. This is because Airbnb is leaning
toward going public through a direct listing, rather than an
initial public offering (IPO), sources have said.

In an IPO, shares are sold by the company or its investors
in a process managed by the investment banks as underwriters. In
a direct listing, however, no new shares are sold, and the role
of the investment banks is more of one advising on market
conditions, as opposed to underwriting.

As a result, companies can save on the investment banking
fees they pay through a direct listing.

Airbnb is considering going public around the middle of
2020, one of the sources said, a timeline that would help it
avoid any stock market volatility in the run-up to the U.S.
presidential election in November of next year.

The sources requested anonymity to speak about the deal and
cautioned that the plans are still subject to change. Airbnb,
Morgan Stanley and Goldman Sachs declined to comment.

Airbnb said last month it planned to become a publicly
listed company in 2020, marking it out as one of the biggest
names to pursue a stock market float next year.

Airbnb was valued at $31 billion in its most recent private
fundraising round, according to data provider PitchBook. The
company sold shares in the private market earlier this year at a
valuation of roughly $35 billion around the time it purchased
HotelTonight, Vox reported.

Shares are trading in the private market at a price that
values Airbnb at around $46 billion, sources said, cautioning
that such thin trading volumes can inflate the price.

By comparison, Hilton Worldwide Holdings Inc HLT.N and
Marriott International Inc MAR.O have market capitalizations
of around $26 billion and $40 billion, respectively.

With a direct listing, Airbnb would follow the route taken
by music streaming company Spotify Technology SA SPOT.N and
workplace messaging firm Slack Technologies Inc WORK.N in 2018
and 2019, respectively. Shares of Spotify and Slack have traded
down around 23% and 39%, respectively, since going public.

Morgan Stanley, Goldman Sachs and Allen & Co were the three
investment banks that advised on both the Spotify and Slack

Slack expected to pay $22.1 million in fees to its three
financial advisers. By comparison, the more than two dozen banks
on the 2017 IPO of Snap Inc SNAP.N , which was worth about $31
billion at the time of its public listing, earned a total of $85
million in commissions.

An Airbnb listing next year would follow a mixed 2019 for
tech listings, with the likes of Uber Technologies UBER.N and
Lyft Inc LYFT.O struggling since going public. Earlier this
week, WeWork’s parent, The We Company, also filed to withdraw
its IPO after investors raised concerns about its burgeoning
losses and the tight grip of its co-founder on its governance.

Airbnb took in more than $1 billion in revenue for the
second quarter of 2019, the second time it exceeded that level
in its decade-plus history, the company said last month.
It gave no details on profitability.

Last month, Airbnb said that as of Sept. 15, its hosts had
earned more than $80 billion by sharing their homes and spaces
on the app, and as of June 1, it had collected over $1.6 billion
in transient occupancy taxes.

It also said it passed a milestone of having more than 7
million Airbnb listings in over 100,000 cities around the world.

Associated Links

  • Slack Tech
  • Airbnb
  • Marriott International Inc
  • Aln & Co
  • Spotify Tech
  • Goldman Sachs Group Inc
  • PitchBook Data
  • Morgan Stanley
  • Marriott Intnl
  • Goldman Sachs
  • Vox Media
  • Uber
  • Slack Technologies Inc
  • Hilton Worldwide Holdings Inc
  • Hilton Wrldwide
  • Spotify Technology SA
  • WeWork Companies
  • Snap
  • Finance
  • Operating systems
  • Companies
  • Primary dealers
  • Subprime mortgage crisis
  • Sharing economy
  • Vacation rental
  • Initial public offering
  • Slack
  • Investment banking