So much for a December slowdown — this morning, Airbnb and C3.ai raised their IPO price ranges and we got early pricing information from Upstart and Wish.
This gives us a good amount of ground to cover. So, we’ll dig into Airbnb’s new price range first, working to understand how richly investors are valuing the American home-sharing unicorn. We’ll repeat the experiment with C3.ai, a company we find utterly fascinating. Then we’ll calculate valuation ranges for both Upstart, a consumer lending fintech, and Wish, an e-commerce giant, to see where they stand.
The Exchange explores startups, markets and money. Read it every morning on Extra Crunch, or get The Exchange newsletter every Saturday.
There are other IPOs in the wings: We’re still waiting on early pricing information from Affirm and Roblox, and DoorDash raised its range last week.
The upcoming calendar is busy. C3.ai and DoorDash should price tomorrow and trade Wednesday. Airbnb should price Wednesday and trade Thursday. Upstart will price next Tuesday and trade the following day.
In normal times, we’d take each element of today’s IPO news fusillade and parse it in its own post. But we only have 10 fingers, so let’s double-time through the numbers and get to what matters while you drink coffee. To work!
Airbnb and C3.ai
Public investors are bidding shares of both Airbnb and C3.ai up ahead of their debuts.
This morning, C3.ai, a company that sells enterprise AI technology, raised its IPO price range from $31-$34 to $36-$38 per share. It both raised and tightened its range, the latter often happening as a company gets a better handle on where demand lies as it ramps toward final pricing and eventual trading.
There are two ways to calculate the company’s new valuation range. The first uses the company’s nondiluted, expected post-IPO share count of 98,655,627, a figure that includes a little more than 2 million shares reserved for underwriters. At that share count, C3.ai would be worth between $3.57 billion and $3.77 billion.
For a company that wrapped its most recent quarter with $41.3 million in revenue, or a run-rate of $165.2 million, it’s a steep valuation. Indeed, the company’s revenue multiple stretches from 21.6x to 22.8x. (Those numbers stretch further if you include some 42.9 shares in the count that are “issuable upon the exercise of options.”)
The company last raised equity capital at a valuation of $3.3 billion calculated on a post-money basis, according to PitchBook.
That C3.ai can command such multiples despite recently flat revenues paints a compelling picture of today’s IPO market.
That picture is further clarified by Airbnb’s new, higher price range. Now expecting $56 to $60 per share from a preceding range of $44 to $50, Airbnb is richly priced. Using its provided share count of 602,448,251, which includes shares reserved for underwriters, Airbnb is worth $33.7 billion to $36.1 billion at its new interval.
If we included another 54.9 million shares from the company — those marked “common stock issuable upon the exercise of options” — its valuation reaches $36.8 billion to $39.4 billion. Some publications are reaching higher figures by including shares that are marked “issuable upon satisfaction of a service-based vesting condition and the achievement of stock price goals,” for example, which expands the company’s valuation.
TechCrunch prefers to calculate valuations based on shares outstanding, and, if it is material, another valuation including options that are merely awaiting exercise. Shares that may or may not vest in the future are not counted in our maths.
Regardless, the new valuations for Airbnb are impressive and far above its final private valuations and those it set this year when it took on funds to help it prepare for a downturn of unknown length.
For a company that shrank in Q3 2020 compared to Q3 2019, it’s a warm reception. Our read on C3.ai and Airbnb is that both companies are timing their IPOs to a moment when the public markets are willing to pay more than private investors might for the same stock. That’s the right time to go public.
Upstart and Wish
Turning to Upstart and Wish, companies we’ve already spent time exploring (more here, and here, respectively), today’s news is less time-consuming:
- Upstart: Upstart expects to price between $20 and $22 per share. The fintech company expects to have 72,460,881 shares outstanding after its IPO. That gives it a valuation between $1.44 billion and $1.59 billion. (On a fully diluted basis, those numbers rise to $1.86 billion to $2.05 billion.)
- Wish: E-commerce giant Wish expects to price for a similar $22-$24 per share. However, it has a far larger, expected post-IPO share count of 586,417,480, or 593,317,480 inclusive of the underwriters’ option. That gives the well-known unicorn an IPO valuation range of $13.05 billion to $14.24 billion, including shares reserved for underwriters. Wish’s valuation rises if you add “common stock issuable upon the exercise of options,” but for the sake of not making the pair of us do more math, we can let things lie.
Per PitchBook, Upstart’s last private price was $750 million. For Wish the number is $11.2 billion. Upstart, then, is set to double its final private price. For Wish, the good news is that it has been able to defend its private valuation and even add a few billion on top.
Remember when flat was the new up? Perhaps, today, only up a little is the new flat? Wish’s IPO gains appear modest compared to what Upstart has managed.
Upcoming
There’s so much more coming. Just among the companies we know are going public soon, there is a good list of names. And then we’ve heard that 2021 should be incredibly active as well, provided that the stock market holds up.
We’ll see you back here tomorrow morning with the latest.
Comment