Kelly Evans: The Airbnb “Pop” That Wasn't

CNBC

Airbnb shares were only up 115% yesterday if you got access to them before they went public. As far as everyone else is concerned, Airbnb shares slipped 0.8% in their first day of trade.  

I know it's convention to use the official IPO price--which in Airbnb's case was $68--as the reference point, but that obscures what really happened with the "hot, hot" IPOs this week. DoorDash the day before was a similar story. Priced at $102, closed around $189--for an 85% "day one" gain if you got the shares before they actually hit the market. In reality, the shares only rose 3.8% from the $182 price where they actually opened.  

We talked yesterday about who this pre-market pop benefits: professional investors who got allocations of shares before they went public; employees and in Airbnb's case, some hosts who had shares of stock before the IPO; and well-connected retail investors whose advisors (typically from big-name brokerages) were able to get them a small slice of the pie.  

But let's not pretend Joe Public was benefitting from this version of an IPO "pop," which happened entirely before the shares hit the market. Just look at the difference between how Airbnb and DoorDash traded this week versus another hot IPO from last summer: Beyond Meat. Beyond Meat priced at $25, opened at $46--and surged as high as $73 during the first trading session. That 59% pop was at least publicly available (the shares closed around $65).  

So in fact, the broader public didn't so much fuel the spectacular IPOs this week--unless they could get their hands on the shares early--as shrug them off. Which makes sense; by the time DoorDash really went public, at $182, it was a $60 billion company with no profits. Airbnb shares at $146 when they finally hit the market made it a $100 billion company; larger than Marriott, Hilton, and Hyatt combined.  

If anything, it's impressive that shares of both companies didn't crater this week once they officially opened. It's no small feat to hold onto such valuations. That said, DoorDash is down about 7% this morning to $172. Airbnb is hanging on to about a 2% gain.  

Could these companies still be the next Amazon, or Facebook? Companies whose best performance came in the years if not decades after their IPOs? Perhaps, but the pre-market price action this week just made it a lot harder for the general public to participate in those gains. Amazon hit the public markets at a $430 million market cap. By the time it was added to the S&P 500 in 2004, it was still only a $17 billion company. Beyond Meat has held up admirably well since last summer, but at $139 a share is still less than a $9 billion name. 

 Contrast that with Airbnb and DoorDash, already valued at $100 billion and $55 billion (given its selloff this morning), respectively. It's great to see these long-awaited IPOs finally hit the public markets. But no investors should be out there thinking these growth stories are in their early days.  

See you at 1 p.m! 

Kelly

Twitter: @KellyCNBC

Instagram: @realkellyevans

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