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Airbnb: Travel Giant Has A Bright Future In The Post-Pandemic World

Apr. 04, 2021 3:56 PM ETAirbnb, Inc. (ABNB)35 Comments
Revolution Capital profile picture
Revolution Capital


  • The company that is changing the way we travel has had a strong opening on the NYSE, despite the lack of global travel.
  • The COVID-19 pandemic had a material impact in 2020, but revenues were down less than expected, displaying Airbnb's ability to show resiliency and flexibility.
  • The classic Peter Lynch quote - "invest in what you know" - fits this stock perfectly.

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Airbnb, Amazon, ebay, News and other Apps on iPhone screen
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Revolution Capital profile picture
Finance professional, with a passion for growth stock research; heavily focussed on future technological innovation and trends that will impact the world as we know it - Electric Vehicles, Clean Energy, SaaS, Cloud, E-Commerce and Payments.My investing philosophy is one of buying exciting, early stage growth companies that bring a new or differentiated product to market that will impact one of the key global markets highlighted above. I normally aim to own them for the long term.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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Comments (35)

W Scott profile picture
Has anyone heard stories of people having reservations canceled and ABNB not protecting them?
Mark Mahaney, the analyst, who upgraded airbnbs price target to 245, has followed airbnb at least since 2015. Btw, he is one of the highest ranked analysts at tipranks.

Expected effects of lockup expiration are already in the stock price. If less sell-off than what is expected -> the stock will fly. Really nice potential for a short squeeze.

It appears a lot of listings are booked almost continuously, also in several European countries. Also, it seems (based on anecdotes) that many of the listings have increased the prices significantly. Several American listings which I follow, have increased their prices with +50-100%.

Q1 will by far be the best Q1 ever. It is almost criminal for the CEO to be so conservative in the guidance. The only reason is that the management wants a significant earnings beat, which given the circumstances is smart btw.
Frank Bird profile picture
@nick name "It appears a lot of listings are booked almost continuously"

Is the supply of rooms expanding in response?

It's great that they can raise prices, but the growth story is equally predicated on supply, not just demand. So I'd love to read more about host retention rates and new host additions.
Lockup 2 day after q1 result. 450m new shares for sale. Maybe better to wait for a drop after earninga and then buy more.
@nick name yes, that should be the 1st sentence of any article involving IPO; not sure which day they report? last time was Feb 25 so maybe around April 25?
@DaveBuch the sec filing says the later of second day after q1 report or 121 days after dec 7th I think it was, so it should be the second day after q1 report. Then some 450m shares can be sold by insiders, but they first have to convert B to A shares. Fore sure a lot of shares will be sold, and likely the founders even want that because of the 20 to 1, b to a voting ratio. Always when b shares are converted, the remaining b shares become more valuable. Anyway, few insiders are so stupid that they sell a lot asap. I am more worried about shorters price manipulation the days after q1 numbers.
airbnb is already at it's peak I don't see it going above $250 max.

What do you mean with peak? Google trends in US suggests otherwise.
@nick name google trend does not suggest the peak of ABNB stock price . i was referring to the stock that it is overvalued .

ok. Extrapolation based on Google trends suggest a very significant beat to guidance. Who knows if the stock price is at its peak now, or not. Historically the market has been extremely bad in predicting the stock price of growth stocks.
Not sure which data the author uses to size TAM, but he got Airbnb’s share wrong: Its revenue equals the roughly 15% take rate, so you gotta multiply Airbnb’s reported revenue by roughly 7 to get the actual booking value, which you then can use for market share. So at 5b revenue, Airbnb processes 33b in bookings.
Also, its business is a two-sided-market place so all growth will be limited by supply or demand-side constraints. On the demand side you can argue that even at a high brand recognition there is still a low total of actual customers, so room to grow. On the supply side though it’s a lot less clearer how Airbnb can maintain growth to keep serving growing demand. So as an investor I would keep a close eye on their supply side growth (and actual operative levers to drive that growth) to understand the potential for overall growth.
”Also, its business is a two-sided-market place so all growth will be limited by supply or demand-side constraints.”

One would expect that the supply increases as long as the demand increases. An increased demand means that more get familiar with airbnb
-> more will also become hosts. Also, the more hosts, the lower the barrier to become a new host.

In addition, an increased demand -> higher prices, which also should drive supply growth.

Take spain that will open in May. With all the tourists that are going there... I have very difficult to see anything else that the number of hosts there will increase dramatically.

yes, short term supply is an issue. Many American newspapers have recently talked about alternatives to airbnb, since it is so difficult to find accommodation on airbnb (everything reasonable is already booked). Maybe that will drive down the stock price. Anyway, long term this is a very good sign to everyone considering being a host.
Frank Bird profile picture
Reading up on the stock at the request of a colleague. An interesting narrative.

What strikes me when reading through the comments is that almost everyone seems to believe that ABNB "hosts" are small individual operators renting out a spare room.

My experience as a property owner in a residential neighborhood in a smallish city with a a large tourism business. The building next door is one of several owned by a commercial operator. He "hosts" numerous rooms and tells me how much more profitable it is than leasing to year-round tenants.

Good for him, but bad for the other tenants in his buildings who complain about the "guests" buzzing their units to be admitted, door locks jammed etc. About once a month some hapless "guest" rings my doorbell asking me how to get into the next building. Minor annoyances.

But what is not a minor issue is the removal of rental units from the city's housing stock. This impacts year-round residents as well as the small bed & breakfast operators trying to eek out a living.

The backlash has already started here and across the country. Won't this limit ABNB's ability to expand as exponentially as many bulls hope?

@Frank Bird

The main point, for the bulls, is that almost no one use airbnb. In q4 there were some 50m nights, and if the averge stay was 5 nights -> only 10m unique stays in q4. That is basically nothing. The potential market will certainly be revised upwards the coming years.

Threats from cities due to similar stories as yours...has been discussed for 10 years, and almost nothing has happened. Cities need more travelers, which airbnb give to them.
Frank Bird profile picture
@nick name Thank you. I am new to the stock.

I cannot argue over the demand narrative, but I do wonder why no analysts touch on a potential supply of rooms issue. Didn't New York City impose some strong restrictions on non-hosted short-term rentals? Those do seem to be the problem, aren't they? Or am I off base?

Like any investment, nothing is clear cut.
@Frank Bird

As you say few or no analysts have discussed the important supply issue.

Big cities may have much bigger problems than Airbnb. In NY, more and more apartments are empty (because they are pure investments) and owned by rich people around the world. The same is true in many/most European larger cities such as London, Copenhagen, Helsinki. This is really bad for the economy of cities. Politicians do what they can to increase revenues in cities, and somehow, hurdles towards airbnb is not a solution. NY, Chicago, San Fransisco etc are great examples. Often bad hotels cost +300 used/night, and many/most simply neglect these cities because of that. Then they realize airbnb is an option, and become new visitors and also they bring additional revenue to cities. Paris is extreme, there must be millions of additional annual visitors coming to Paris because of Airbnb. A few years ago it was very expensive/difficult to find reasonable accommodation in Paris from june-september, since that it became easier and easier every year.

What a few analysts has said is that airbnbs management has been extremely innovative. Kind of Steve Jobs or Amazon innovative. Just like Tesla, airbnb executing and replanning and redefining the business model, to just expand their leading position. A few analysts have already realized that! And I am sure, more will realize it the next years.

The stock is very expensive. Hopefully the stock will fall a lot, so I can buy more shares. Airbnb is a good stock to buy (diversify over time) shares and wait for 10 years.
“Airbnb's lockup expiration date should occur sometime in the 2nd quarter of 2021 after they release their first earnings report as a public company. Airbnb's first earnings call has yet to be announced. There could be risks of a near term sell off if Airbnb insiders sell a lot of stock.”
maximumvalues profile picture
Nice. Here are two risks missed. Hosts moving to another app. 10y yield rising that hurts the discount rate applied to value the stock. I own a May bearish put spread $175/$140 .. This not for profit could be a "sell the recovery candidate"
EV = mkt cap - cash on hand, you added cash on hand....good analysis though
@BarrenWaffet and also you af debt not subtract. Author got it totally wrong
Frank Thomas in Florida profile picture
Airbnb has to do better job of screening hosts. I've had some really bad Airbnb stays; to include dirty linens not changed between guests; smoke alarms chirping; smelly conditions; cockroaches; etc... Reviews are semi-worthless because most of us, including me, always leave good reviews. Can Airbnb have inspectors go undercover and check on hosts? If Airbnb wants to command pricing similar to even cheap hotels, Airbnb has to address quality of stays, especially cleanliness.
@Frank Thomas in Florida good point “Reviews are semi-worthless because most of us, including me, always leave good reviews.” Reviews are useless because guests don’t leave bad reviews - I’ve been in many shitholes that have fantastic reviews. And I don’t recall a single host prodding me for a good review. Guests have a built in disincentive against leaving bad reviews. Undercover inspectors will be an expensive option.
Frank Thomas in Florida profile picture
In the home sharing space, does annyone have thoughts on competition? In the USA, there's second place VRBO; which is owned by Expedia and seems to be a solid competitor. In places such as China, Tujia has the most market share. Given Airbnb's losses to date, will Airbnb be able to fend off the competition and eventually turn a profit? Per the last business call, Management declined to predict when Airbnb would turn a profit. I'm concerned about Airbnb turning a profit.
maximumvalues profile picture
@Frank Thomas in Florida Good points. All need to keep in mind brand perception can change quickly and their is always another App. 10y yield can crush growth stocks too.
04 Apr. 2021
Thanks for your analysis. The one thing that keeps me away from Airbnb is the high market cap compared to Expedia. I know that’s not the usual way to compare but with Barry Diller back on deck and VRBO being in Expedia’s portfolio as a direct competitor I’d rather put my coins on them, if I had to decide. Thanks anyway.
Affirm, do many stocks, however, only the few will fit your bio.
Perhaps Affirm is one of them?
Welcome & the best of luck to you on joining SA, we will look forward to more articles from you.
todd.kaime profile picture
Excellent analysis.
Hmmmmm🤔. Nice article
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