Analysis Scholarship: What does the Airbnb Stock Exchange Introduction mean?
Fragilized by the COVID crisis, AIRBNB filed its prospectus for a stock exchange introduction to raise at least two billion with the public. Wall Street investors look forward to this operation with an interesting business model and promising growth prospects. What would this introduction on the Stock Exchange for Airbnb?
Entrepreneurial Model: Airbnb Grand Leader of Booking and Home Sharing Services
Airbnb: company specialized in reservation services and home sharing
The airbnb entrepreneurial model is a commercial model of aggregator just like Uber and Oyo. They do not work like large chains of hotels. Like the commercial model of GrubHub, AIRBNB also works with an online platform that connects each element of the model. The main assets of Airbnb are individuals and hosts that are the key elements of the airbnb process.
Unlike large hotels, AIRBNB has a minimum cost and does not need huge capital.
Airbnb acts as a platform for hosts and travelers. Guests can hire their property and if anyone wants to stay there, hosts receive rent in exchange. People staying at Airbnb live a completely different experience remaining close to the inhabitants.
The airbnb revenue model consists of fees charged by guests and travelers, which is quite similar to the postmate income model. The jobs also gain money with the fees. The airbnb revenue model works on lists and stays. Airbnb offers a platform where these inscriptions and reservations are made and that is where the airbnb income comes. Airbnb revenues come from two main sources:
The Guests' Commission: Whenever a person chooses housing and makes a payment, AIRBNB takes 10% of the payment amount as a commission. This is one of the components of the Airbnb fee structure.
Traveler Transaction Fees: When travelers make a payment for their stay, they have to pay a 3% commission for the transaction. This amount is added to the airbnb revenues.
Economic crisis and confinement: Airbnb in a difficult impasse
Evolution of 2017 AIRBNB reservations at T3 2020
The booking giant and house sharing has suffered a lot during the confinement period. For the quarter following the pandemic, the company's turnover decreased by 72%. Reservations fell by more than half from 6.8 billion in the first quarter for $ 3.2 billion in the second quarter.
Airbnb also reported that it recorded a loss of $ 697 million for the first nine months of the year. This loss is much higher than last year over the same period when the company has decreased by 674 million turnover due to the director's marketing and non-strategic expenditures.
Like the worldwide rebound in the third quarter, particularly marked by the historic growth of 33.1% of the US, the number of reservations on Airbnb increased by 250%, or $ 8 billion. This spectacular rebound has reduced 18% annual income loss.
Losses and debt: Airbnb was in great difficulty even before the pandemic
During confinement, the number of reservation has reduced more than half on Airbnb
In a statement, the director of the company, Brian Chesky, reported that the company had been losing long before the pandemic. For Airbnb, the focus has always been on the acquisition and growth of users. This focus was at the expense of profitability, and there is no way guarantees a solution to this long-term problem.
"We have suffered clear losses every year since our creation, and we may not be able to reach profitability," said the director of the American Tech Giant.
He honored. : "We have undergone net losses of $ 70.0 million, $ 16.9 million, $ 674.3 million and $ 696.9 million for years ending December 31, 2017, 2018 and 2019, And the nine months ending September 30, 2020, respectively. Our cumulative deficit was $ 1.4 billion and $ 2.1 billion as at December 31, 2019 and September 30, 2020, respectively. "
Since its creation in 2008 until September 30, the company has accumulated nearly 2 billion debts. Borrowings have been made to cover marketing and expansion costs but the company faced a major brake: regulation. Uber
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