Airbnb To Split Privately-Held Shares 2-For-1 Ahead Of IPO: Report

Airbnb is splitting its privately held shares 2-for-1 ahead of its initial public offering, Bloomberg reported Sunday.

What Happened: The company’s board of directors has approved the decision to split, which would be reflected in accounts beginning Tuesday, as per a company email seen by Bloomberg.

The worth of the private shares has spiked 10.4% as of the end of the second quarter, a person familiar with the matter told Bloomberg.

The increase in valuation is in comparison to figures last reported to the Internal Revenue Service, as per the email. 

The IRS valuation is an estimate at the “low-end of a defensible valuation range performed by compliance experts,” according to Morgan Stanley’s MS Shareworks. 

Venture Capitalists rarely consider these 409A valuations and negotiate market values with entrepreneurs instead, said Shareworks.

The shares were valued at $69.76 as of Sept. 30 and were valued at $63.15 at the end of the reporting period, as per the email.

After the split, the shares were reportedly valued at $34.88 per unit, as of Sept. 30.

Why It Matters: The stock split will reduce the price of shares for IPO investors and double the number of shares for current holders of the stock. It does not affect the value of their holdings.

The vacation rental firm was valued at $18 billion in April at the time when it raised $2 billion in debt from investors. According to Reuters, the company's IPO could generate proceeds of about $3 billion.

A recent appraisal priced the company’s fair market value at $21 billion as the travel and tourism industry rebounds from the COVID-19 crisis.

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