Facebook vs. Airbnb – Comparing IPO’s

Facebook’s IPO in May 2012 was a big event.
As a private company, it raised $1 billion.

At the IPO, FB sold $16 billion worth of shares of which the company kept $6.8bn. The rest went to expenses, brokers and selling shareholders.

FB’s IPO market cap was $104 billion. For 2012, FB produced $5 billion in revenue and net profit of $1.3 billion.

AirBnb has raised $6 billion cash as a private company and it’ll “raise” $2 billion at the IPO (don’t yet know how much the company keeps – see selling shareholders).

It’s market cap at IPO will be $35 billion.

AirBnB has $5 billion revenue although it’s not profitable yet. That doesn’t matter ’cause the market these days is only paying for multiples on revenue.

Facebook’s stock price halved soon after the IPO to reach a low of $17.55 per share. Since then, it has risen to a price of $272 per share and boasts a market cap of $777 billion.

Comparatively to other recent “tech” IPO’s, Facebook’s value saw the majority of its appreciation as a public company.

Inversely, AirBnB has raised a lot of money as a private company at ever escalating valuations, so I say be careful being the absorbing buyer of the selling shareholder, however this stock could be a real crackerjack.

Incidentally, AirBnb, Uber etc etc are not “tech” companies.

It’s not a capital raise, it’s a sale offer

As the IPO market heats up, so does the shenanigans of the offer details.

Cleanspace’s (CSX.AX) recent prospectus has a sense of artfulness.

The company ‘offered’ $131 million, of which $111 million is sent to ‘existing shareholders’. (see: use demand from IPO subscribers to soak up the selling).

This only leaves $20 million for corporate use.

But the brokers promoting the IPO receive $5 million and a further $5 million is being used to pay back a loan. Deduct a few more professional services fees and the IPO hasn’t really raised much at all for the company’s operating purposes.

And ‘existing shareholders’ with remaining holdings entered into a ‘voluntary escrow’, which is quite standard although hardly a commitment when 25% of the shares are able to hit the market in 4 months time and another 44% of the escrowed stock free up 10 months from now (August 2021), which will likely be before the 2021 full year results are released.

(the FY20 annual report was signed off August 27, 2020)

I may ask what is wrong with the picture?
and suggest to read your prospectuses !

For now, all seems to be fine 🤷🏻‍♂️

With an IPO price of $4.41, CSX traded to a high of $7.44 on its public debut.

November 2, 2020
by Rob Zdravevski

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