IPO-Palooza: Airbnb and DoorDash soar on their first days as public stocks
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That escalated quickly... If the stock market was Hollywood, this week would've been its Sundance Film Festival. Two famous tech platforms delivered back-to-back blockbuster IPOs in their debuts on the public market. BTW: the IPO price is what institutional investors (like mutual funds) — not regular investors like us — get to pay per share.
- DoorDash: The IPO was priced at $102 a share. By the time shares hit the NYSE, they were already trading at $182. Now Dash has a $59B market value, more than 3X its June valuation.
- Airbnb: It IPO'd at $68, but opened on the Nasdaq at $146. Its market value soared to over $100B, more than Marriott, Hilton, and Hyatt combined — and more than 5X its valuation in April.
Hungry for PDA ... Despite a pandemic and an economic crisis, 2020 has been a blockbuster year for IPOs overall. We whipped up two explanations for the IPO-palooza:
- Stock-timism: The stock market is at record highs, with tech stocks leading the charge. The Nasdaq Index is up 36% this year — tech companies want to strike while the market is hot.
- Zoom life: Banks are able to execute IPOs faster — Zoom pitches have replaced physical roadshows.
Don't forget interest rates... Stocks have rallied to record highs partly because interest rates are at record lows (shout-out: the Fed). Super low interest rates can inflate the value of assets like stocks, because they make things like savings accounts seem less attractive. If the APY on your savings account is higher, you're less likely to invest in stocks, which carry risk. If the interest rate is nearly nothing, you're probably more likely to invest, driving up stock prices.