Sept idea comp - ABNB
In early 2020 $ABNB faced perfect ⛈️. Coming off significant 📈 in spending, 📰 of 🦠 virus that would lock down 🌎. With plans 4 public IPO, Airbnb was in 4 most difficult period since early days

By 8th week after Covid-19 had been declared a global pandemic $ABNB lost 80% of its biz. 📰 was having field day at ABNB expense with click bait headlines such as "Is This the End of Airbnb?"

ABNB forced 2 delay IPO, ✂️ 25% of w/force, and shutter non-core biz

People were isolating @ 🏠 home 4 months, cancelling🧳plans, & avoiding borders. But funny thing happened people got 🥱& wanted change of scenery. Millions took 2 $ABNB 2 🔍place to stay in nearby towns/cities as part of new "work from anywhere" that blurs lines b/ween travel & living

Tailwinds #Airbnb enjoys from new thematic of more flex living, enabled by remote work, has me bullish about future

Accenture survey- 83% of workers prefer hybrid work model, many co's adapting

📈 in remote work led 2 changing travel habits

42% want to use co’s remote working policy to work from abroad

With more people having flex to live and work from anywhere, $ABNB evolving from just travel co into platform for travelling and living. For investors this means an expanding TAM

Market Opp -
$ABNB has massive TAM they've estimated to be $3.4T

Short term stays: $1.8T market is where Airbnb has done most disruption to date. created entirely 🆕️ category of travel for authentic experience

$ABNB leader in vacay rental platform sector. closest comp VRBO has 5% of short term market, Airbnb = 25.97% share

still in early innings of market w/ 91% of travelers having still not tried vacation rental.

Long term stays: A big part of my investment thesis is the potential of long term stay market, defined as stays 28+ days

2018, 13% of nights booked on $ABNB were for stays 28 days or longer. In 2019, 14% of nights booked on ABNB were for stays 28 days or longer, reaching 21% in Q1 2022 long-term stays $ABNB fastest-growing category

Experiences: $ABNB launched experiences biz in 2016, as "activities designed by locals". Hasnt taken off. It doesnt offer tickets to popular, and institution operated, attractions.
My investment thesis dont count on ABNB ability to capture more of experiences market, nice bonus.

To create a comparable offering to $ABNB, w/ breadth/density of unique accommodations, would be very difficult for any competition. ABNB is undisputed product leader in authentic travel.

$ABNB has one of strongest networks in all of tech, not just online travel platforms. Then, add a brand that has achieved verb level status, and a trust and protection program that is the envy of the vacation rental platform industry.

Optionality: Airbnb wants its second act to be their Experiences offering

I see opportunity for them to expand into travel market's 2nd largest segment, travel packages. Thru existing accommodations and experiences offerings, airline partnerships, + treasure trove of travel preference data, $ABNB is in a good position to curate some compelling packages for its users

$ABNB has current market cap of ~$75 billion, larger than any of other major hotel co's
Down from its 52-week high of $212, $ABNB been kicked in 🦷 like most tech co's in bear market. now more than 40% lower than highs, at reasonable Price/Sales ratio of 9.

As ABNB grows its long term stay business I believe they have more room to grow their take rate.

With its asset light business, efficient sales and marketing spend, and expected operations and customer support efficiencies, $ABNB has makings of a very cash generative business for years to come

$ABNB was founded in 2008 by current CEO Brian Chesky. The impetus of the idea came from a desire of the two roommates to pull in some cash to pay their overdue rent

Best way to get insight on quality of leadership at a co is to go to source. Per glassdoor, very encouraging - 94% approve of CEO.

Greatest concern about $ABNB thesis is not co itself. I think it's unlikely at this stage for the ⚙️ of Abnb to fall off. Especially with valuable brand, strong network effects, superb leadership.

For me to continue my investment in $ABNB I must see proof of at least 1 of 2 tail winds materializing:

  1. Continued growth of the long term stay market

  1. Vacation rentals stealing more share of the global travel annual spend

Stock Metal Investment's avatar
4% FCF yield looks compelling from a valuation standpoint. I'm worried about regulations though, cities hate AirBNB. Most places have a big problem with housing and AirBNB makes this a lot worse by people buying up appartments to use for $ABNB. I also struggled with all the emojis lol, besides that great write up :D
Christian's avatar
@stonkmetal that’s the only argument ever against Airbnb and honestly it’s tiring to hear lol. I see that all over twitter all the time. If that’s the only argument against Airbnb I’ll happily add. I don’t see that as a big issue for a bunch of reasons
Christian's avatar
@stonkmetal and that FCF makes me believe in love lol. I love it
Christian's avatar
This was such a great write up on the company. I follow Airbnb as well and truly enjoy the company a lot. Very very special community any and what they have been through has only made them stronger. Long Airbnb
Nathan Worden's avatar
I think the ‘Experiences’ market is a creative offshoot of the main business. At this point it’s probably best to not have that be part of the main thesis (as you stated)— but I look forward to the creative services and experiences that will come from this :)
Matt wolodarsky (aka The Wealthy Owl)'s avatar
@nathanworden i think its much harder for the average joe to be good at delivering compelling experiences, vs host and therefore less quality selection. Prolly will remain a niche service
Nathan Worden's avatar
@matt oh interesting— my impression was that Airbnb would attract more professional experience services rather than the average Joe trying to do an add-on. As in— a zip lining adventure experience in Mexico would want the distribution so they offer that service on Airbnb. Or a grandma with a successful cooking class in Spain sees an opportunity to charge wealthy tourists more, so she lists on Airbnb too.

My assumption might be incorrect, but I see an ‘experiences’ market that already exists but it is fragmented and not very global. Rather than encouraging new people to try and offer an experience that they never have before, I think Airbnb will attract the best ‘experience offerers’ to list their experience in Airbnb
Matt wolodarsky (aka The Wealthy Owl)'s avatar
@nathanworden good point. I can see that happening. The other issue is they dont allow big ticket attractions on platform, limiting reasons to use it for some
Keith C's avatar
Analysis is crisp and insightful. Local regulation is a concern not mentioned, as government overreach at a municipality level can play a major factor in growth. As a rental owner myself, both my State and township have recently passed regulations which make my life (as the little guy) much more difficult.
Conor Mac's avatar
Succinct and to the point, great pitch Matt!
Sagar Vensi's avatar
Nice write up.