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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
Valuation:
$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
Leadership:
$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:
- Continued growth of the long term stay market
- Vacation rentals stealing more share of the global travel annual spend
Mysite
Airbnb Deep Dive: The verb for authentic travel, and maybe a new lifestyle
In early 2020 Airbnb faced a perfect storm. Coming off a significant ramp in spending, news of a deadly virus was emerging that would go to lock down the world. With plans for a public IPO, Airbnb was in for its most difficult period since the early days of its founding. What probably felt like a disaster for CEO Brian Chesky at the time turned out to be a transformational period for Airbnb. The category defining travel company would emerge in a much better position to capitalize on a revolution
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