TAR wrote an amazing article on DreamFolks - I urge everyone to read that article to understand the weakness in the business model.
- The biggest risk is that the company doesn’t have any bargaining power - either with it’s suppliers (airport lounge operators) OR with it’s buyers (banks / CC issuers / telecom operators)
- The IP looks quite simple to replicate. They don’t have a lot of backend engineers to manage the ‘technology platform’. What stops other bigger players (Priority Pass) to build this?
- It already has a market share of 95% in the card based lounge access market. So, the only room to grow is MORE PASSENGER TRAFFIC. International markets are not that easy to capture.
Positives that I am seeing right now:
- It is trying to add new business streams (Visa services, E-SIM, Golf services)
- Collaborated with Plaza Premium Group to include >340 lounges in its network
New streams will take time to contribute to the topline + this partnership with Plaza - I’m not really sure how much benefit they will derive from it because they haven’t partnered with foreign banks / card issuers. So only if you use a domestic card in an international lounge, will it benefit DreamFolks (as per my understanding).
Disclosure: Small position in the stock, comtemplating to sell if the stock zooms further
Wrote a detailed article on this topic - DreamFolks Services : A play on lounges
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