Why a Popular Travel App like Airbnb Got Smashed in the Stock Market
If you are into travelling, you might be aware of the world-renowned firm Airbnb. It is an American online rental marketplace company that connects people who want to rent out their homes with people who are looking for accommodations in that area. Thus, it is a platform that maintains and hosts a marketplace for people to access places of stay on rent. It operates through its app and website.
The company gained popularity over the years and was one of the most popular apps of 2019 across the world. However, it suffered a downfall in the stock market. The place where the success of all A-listed companies is presented from around the world. Let us dig deeper and get to know the reasons behind this untoward incident that smashed Airbnb in the stock market.
NASDAQ, the American stock exchange company had stated that Airbnb was having a good IPO (Initial Public Offering) in the first week of December 2020. It further said that the share prices of the company were 50–60 US dollars even before the shares were up for trading. The price went to double its value after the first day of the public offer. However, the continuous pattern of success came to a halt when the price fell drastically to everyone’s surprise. The company’s IPO event was held on Wall Street and included many huge investment banks. Out of those, the firm named Gordon Haskett did not attend the grand event. Gordon Haskett said that the company is underperforming and they don’t feel right to invest in it.
Analysts say that the stock price of the company is three times more than the rival companies that offer travel services such as Booking Holdings and Expedia. However, they also believe that Airbnb’s rapid growth deserves a premium. Further commenting on the downfall, analysts say that they still consider this high 300 times plus premium as excessive and a “tactical valuation-driven downgrade”. however, they believe that it will be healed in the future.
Now, in today’s time when Airbnb has recorded more than $1 billion in losses, and analysts predict it to be continued for at least a year or two due to excess negative cash flow, Gordon Haskett expects it to get at $103 a share as opposed to its current valuation. Thus, we can say that the travel company is expected to face a crisis in coming times certainly. However, we hope to see it come back because of its amazing functionality.
Recommended Read: How Much Does it Cost to Develop an App and Website like Airbnb?
Let us take a look at the amazing functionality and business model of the Airbnb app and website.
It functions in a manner wherein the localities of a particular area list their place for rent and earn money for offering their place of stay. What’s more, is that it gives travellers the chance to come across the local people and make new social bonds wherever they go. Founded on 1st August 2018, Airbnb currently operates in over 190 countries across the world.
The Airbnb app has three parties on its app namely:
1.Hosts
These are the people that list their properties on the app for rent.
They are allowed to mention their property with the pricing, facilities, and check-in and check-out details.The hosts have the freedom to accept or reject requests of travellers based on reviewing their profile.
2.Travelers
Travellers are the people that book the place listed by the local people on the app or website. They can browse, search, and filter based on rent, prices, facilities, locations, and other categories. They can pay online through the payment gateways mentioned on the app.
3.Freelance Photographers
The photographers can also use this travel rental app. They can find opportunities to be hired to click pictures of these properties. The higher the quality of the photos, the better responses can be seen on the property. Ultimately, the photographers get directly paid for by Airbnb.
3. Profit-making model
The Airbnb app earns from the commission it charges from the property owners or hosts. It also makes money from the transaction fees paid by the travellers.
Wrapping it up
The online travel rental app was a brilliant idea when it had arrived in the market. However, due to the global pandemic caused by COVID19, it went through turmoil. Nonetheless, there are fair hopes of seeing the company make a comeback and excel in the coming years.
