Airbnb has reportedly picked Morgan Stanley and Goldman Sachs to help it go public

Reuters

• Airbnb is set to hire Morgan Stanley and Goldman Sachs as advisers for its planned stock-market flotation in 2020, Reuters reported Wednesday.
• The home-share company represents a major client and is poised to be among the biggest firms to go public next year, with a private valuation of $31 billion.
• The banks are likely to serve more as market advisers than offer underwriters, as a direct listing doesn’t involve the sale of any new shares.
• The unconventional approach allows Airbnb to avoid the millions of dollars in bank fees commonly associated with IPOs.
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Airbnb is poised to hire Goldman Sachs and Morgan Stanley as join advisers for its planned stock-market flotation in 2020, people familiar with the plans told Reuters Wednesday.

The home-sharing company represents a high-profile client. But if it opts for a direct listing, as has been reported, the mandate will likely be less rewarding for the banks. While traditional IPOs can bring banks millions of dollars in underwriting fees, Airbnb’s direct listing plan won’t involve the sale of any new shares.

Morgan Stanley and Goldman Sachs would likely serve as market advisers, and not as an IPO underwriter, Reuters reported.

Airbnb is considering a move to public markets in the middle of 2020, timing that would avoid volatility from the US presidential election, one source said. The firm is privately valued at around $31 billion, suggesting it could be one of the largest companies to go public next year.

Direct listings have become increasingly common in the tech sector, with Spotify and Slack among the biggest names to chose the route over IPOs in recent years.

Read more: Morgan Stanley says WeWork’s failed IPO marks the end of an era for unprofitable unicorns — and explains why it leaves the market’s tech kingpins vulnerable

The company’s move to public trading arrives after numerous tech IPO flops and delays throughout 2019. Unicorn companies — startups with $1 billion valuations — Uber, Lyft, and Peloton all plummeted after going public in 2019, wiping out hundreds of millions of dollars in investor wealth during their debuts.

WeWork pulled its IPO in late September after heightened scrutiny led to CEO Adam Neumann’s stepping down. The co-working company saw its valuation plummet roughly 75% as analysts critiqued the firm’s heavy spending and lofty ambitions.

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