Feb, 2021 - By WMR
After a loss of US$ 490 million in the annual revenue of 2020, Airbnb has witnessed growth in its market value.
The American vacation rental company, Airbnb, had cancelled the bookings of some of its guests staying in company’s Washington outlets due to political unrest in the country. While the tourism business was heavily impacted by the pandemic, domestic tensions in various countries across the globe have only worsened the position of the tourism industry. The vacation rental company saw a 32% drop in its yearly revenue for 2020 compared to 2019. Moreover, the business of the entire tourism industry dropped by 42% in 2020. The second quarter of 2020 became a nightmare for Airbnb as the business was hefty 72% down on yearly comparison. Although, the third quarter saw a modest 18% decline comparatively and the profit margin of US$ 420 million. The value of the company stands at US$ 180/share as of January 21st, 2021.
Airbnb has tried to cover the impact of the pandemic on its revenue by developing an asset-light business model to combat the altering trends. The company has stabilized its operating costs by cutting down the salaries of executives and marketing expenditures.
But the necessary funding of US$ 3.5 billion that was given by public listing to Airbnb, has inoculated the shares of the company and caused its market capital to sky-rocket to US$ 101 billion. Now the company has to live up to the expectations of new investors.
On January 22nd, 2021, Airbnb unveiled ‘Farm Stays’ at various outlets of the U.S. The company promoted the farms as ‘the escape for Work-From-Home employees’ to attract some customers. These strategies may not be enough to give ground for Airbnb’s huge US$ 101 billion market valuation that will prevent companies from investing in it.