Bogumil Baranowski of Sicart Associates presented his investment thesis on Airbnb (US: ABNB) at Best Ideas 2023.
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).The content of this website is not an offer to sell or the solicitation of an offer to buy any security. The content is distributed for informational purposes only and should not be construed as investment advice or a recommendation to sell or buy any security or other investment, or undertake any investment strategy. There are no warranties, expressed or implied, as to the accuracy, completeness, or results obtained from any information set forth on this website. BeyondProxy’s officers, directors, employees, and/or contributing authors may have positions in and may, from time to time, make purchases or sales of the securities or other investments discussed or evaluated herein.
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