Airbnb hosts see windfall from wild IPO gains

(Reuters) - Airbnb Inc hosts who were allowed to invest in the home-sharing firm’s $3.5 billion initial public offering (IPO) more than doubled their money in a few hours on Thursday, a windfall that otherwise would only have been reaped by Wall Street’s elite.

FILE PHOTO: Small toy figures are seen in front of displayed Airbnb logo in this illustration taken March 19, 2020. REUTERS/Dado Ruvic/Illustration

While the vast majority of the newly issued shares went to big mutual funds and other institutional investors, Airbnb reserved $238 million worth of stock for its hosts, according to company filings.

These shares had a remarkable run after pricing at $68 in the IPO on Wednesday. They ended their first day of trading on Thursday up 112.8% at $144.71.

“It was a good move for Airbnb, as it made hosts feel appreciated for their involvement on the platform,” said Jenn Schreck, a film industry worker and Airbnb host in Atlanta, Georgia.

It was not clear how many hosts participated in the IPO and snapped up some of the 3.5 million shares allocated to them, though one source familiar with the matter said the demand outstripped supply.

Many of the hosts welcomed the opportunity to buy into the IPO after the company refused to compensate them for canceled bookings during the COVID-19 pandemic. Airbnb is facing a class action lawsuit from hosts and hundreds of arbitration cases stemming from that decision.

“Not everyone was happy with how Airbnb handled host bookings at the start of the shutdown, and a lot of people were talking about jumping ship,” Schreck said.

Her participation in Airbnb’s IPO was the first time she invested in the stock market. She invested $13,600 for 200 shares, the maximum Airbnb allocated for each U.S. host. She is now sitting on a paper profit of more than $15,000, and said she would hold onto to the shares until they hit $200.

Others decided to pocket the gain as fast as possible.

Air Concierge Inc CEO Ryan Danz, who manages about 500 properties on Airbnb and other platforms, said he has been trying to sell all his shares after the stock started trading. He was frustrated to find he was only allowed to sell shares through a broker by phone rather than online, and was waiting on the phone to sell.

“It’s a fraction of what we lost during the March-May cancellation payout override,” said Danz, referring to Airbnb forcing hosts to give refunds to guests for pandemic-related cancellations.

Richard Fertig, a Wyoming-based host with over 50 listings on Airbnb, said he would hold onto the shares after the pop.

“I like holding the equity of the business that I helped grow,” said Fertig.

Airbnb Chief Executive Brian Chesky told Reuters on Thursday the program was created, based on hosts’ feedback, to show appreciation to their contribution to the community.

“Our hosts helped create this community and so it would be nice, if they want to, they can co-own the company,” said Chesky.

Airbnb is not the first technology startup relying on the gig economy to make shares in its IPO available to people it relies on for its services. Ride-sharing firms Uber Technologies Inc and Lyft Technologies Inc allowed drivers to buy into their IPOs last year.

Reporting by Krystal Hu in New York and Jane Lanhee Lee in San Freancisco; Additional reporting by Joshua Franklin in Miami; Editing by Tom Brown