Bogumil Baranowski of Sicart Associates presented his investment thesis on Airbnb (US: ABNB) at Best Ideas 2023.

Thesis summary:

Airbnb is a relatively new, but well-established company. It is the world’s largest alternative accommodation travel agency.

With $8 billion in revenue, $1.7 billion in net profit, $3 billion in FCF, $55 billion in market cap, and a $90 stock price, Airbnb trades at around 35x LTM earnings. It is a fast-growing business with improving margins, strong FCF, and large market potential ahead. The stock is down, cheap, and out-of-favor. Growth is slowing down after a fast recovery in 2021. It is still growing at 30%, but if growth was to settle at mid-teens in the next few years, and margins held steady or improved slightly from here, even with further multiple compression, we could see mid-teens annual returns, with large potential ups and downs as the company handles the ever-changing macro backdrop and ever-evolving consumer preferences.

The company went public in late 2020 at $68 per share, opened at $146, and reached $200 in 2021 and briefly in 2022. Since then the stock price dropped to $85-90 per share.

The business went from fast growth pre-pandemic to a dramatic 80% drop in sales in early 2020, followed by fast recovery, with anywhere from 50-200% year-over-year growth over the past couple of years. It is a much bigger and better business than ever before.

Business mix: Airbnb has 4 million hosts in 100,000 cities and towns across 220 countries and territories. 54% of revenue is in North America, 32% in EMEA, 7% Asia-Pacific, and 7% Latin America.

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About the instructor:

Bogumil Baranowski is a founding partner of Sicart Associates, LLC, a New York City-founded boutique investment firm catering to families and entrepreneurs on both sides of the Atlantic and the Pacific. He is the lead portfolio manager of Sicart Focus Partners, L.P., a private investment fund. He has almost two decades of investment experience. He holds a Master’s degree in Finance and Strategy from Institut d’Etudes Politiques de Paris (Sciences Po), and a Master’s in Finance and Banking from Warsaw School of Economics. He is the author of Outsmarting the Crowd – A Value Investor’s Guide to Starting, Building and Keeping a Family Fortune (2015), and Money, Life, Family: My Handbook: My complete collection of principles on investing, finding work & life balance, and preserving family wealth (2019). He is the host of Talking Billions Podcast (Intimate conversations about money, wealth, and living a rich and fulfilling life.). He is a TEDx Speaker, and a former Executive Board member of one of the oldest and most advanced Toastmasters International clubs in New York City, and an Instructor at MOI Global (The Community of Intelligent Investors).

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