This is my first post after lurking for a long time, sorry if it doesn’t fit along with the others.
One of my bigger positions, aside from the SaaS companies everyone always talks about on this board (CRWD, DDOG, NET) is ABNB. I wanted to get the thoughts of some of the other folks on this board.
My bullish indicators:
- Airbnb cut their marketing budget by over 50% during Covid, naturally, in order to save on unnecessary costs, and after the Q2 Covid peak, saw they still generated 95% of the traffic they did with the same marketing budget (https://www.campaignlive.co.uk/article/airbnb-slashes-spend-…). This speaks to the brand recognition they posses, and ability to scale without expensive customer acquisition costs. This type of experiment with marketing budget is incredibly drastic, and no company would normally be able to run it, but Airbnb did with tremendous results, now giving them the ability to save ~50% on their marketing budget.
- Airbnb’s non-GAAP adjusted EBITDA is actually very promising, even with COVID taken into consideration. Look at their net income/(loss) for each quarter in 2019 vs 2020:
2019----2020
(247k)----(334k)
(42k)----(397k)
313k----501k
(276k)----(20k)
Interestingly their Q3 & Q4 look INCREDIBLY strong in 2020 compared to 2019, with the exception of Q2, they’re actually performing better in Q3 & Q4 despite most countries still experiencing a net decrease in travel. If I’m to believe this, Airbnb’s non-GAAP EBITDA is actually HIGHER in 2020 than 2019. NUTS!! - Airbnb has a huge moat that will make competing with them incredibly difficult. There are 4 million Airbnb hosts globally (according to the CEO during earnings), which gives them an incredibly strong network effect. Why bother to list a house on a competing platform when the traffic to Airbnb will be what drives all of your rentals / bookings? And why, as a traveler, use a different site when Airbnb already has such a huge base of homes to rent? It’s a vicious growth cycle that’s great for business and keeps users and hosts in the loop. Another thing is the Experiences segment. Airbnb is not breaking this out yet, but I believe the expansion into a related vacation service makes their platform even more sticky, for both hosts and travelers.
- Airbnb is not just for people on vacation. According to their earnings call there was “strong retention” on the platform and uses beyond vacations, especially long term rentals, and domestic business travel. If you get a budget from your company to travel for work, would you rather spend $300 / night in a 9’x9’ hotel room or rent an entire penthouse apartment (depending on the city)?
My bearish indicators:
- They are not expanding into other segments as fast as I would like to see. Maybe it’s demanding too much, but I can imagine all the places Airbnb expands to, becoming a ubiquitous platform for housing, temporary, long term, vacation, rental, rent-to-buy, etc. Maybe I’m wrong with that as a longterm goal for the company, but their expansion to Experiences was incredible for their growth, and I would like to see similar tangential use cases enabled by their platform.
Sorry for the post formatting, I couldn’t quite figure out how TMF allows post formats, since it wasn’t HTML or Markdown, Google was not much help either -_-
