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Airbnb: "Turning The Corner"

As 2023 draws to a close, Airbnb continues to reach new heights. Nights & Experiences (N&E) booked on the platform will approach 450 million this year, up ~6x since 2015, with cumulative guest spending (gross booking value, or GBV) of ~$73 billion. For its efforts, Airbnb will generate ~$9.8 billion in revenues (~13.5% of GBV, ~100 basis points higher than FY18). Finally, with help from a significant improvement in its cost structure over the past five years, Airbnb will generate EBIT of ~$2.4 billion, up nearly 30% over FY22. This is a new world for a company that previously struggled to stay in the black. Airbnb’s TTM operating margins are more than 3,000 basis points higher than pre-pandemic levels. This reflects OpEx leverage across all expense lines, with the most significant improvement attributable to Sales & Marketing expense (~1,700 basis point improvement from YE FY19 to YTD FY23). The near-death experience that Airbnb faced during the early days of the pandemic ultimately led to operational changes and a narrower strategic focus at the company; in hindsight, this is a much better business for having lived through those tough times. (“We made many difficult choices [during the pandemic] to reduce spending, making us a leaner and more focused company; we’ve kept this discipline ever since.”)

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Airbnb: "Turning The Corner"
From “Capitalizing On Adversity” (February 2023): “In mid-2022, as Airbnb CEO Brian Chesky reflected on the company’s evolution since the beginning of the pandemic, he said the following: ‘Some of the best companies are born in recessions, they're born in crisis;

The divide between those that live with parents vs those that live away from home
By 2030, it's expected that the majority of Gen Z is in the workforce. With Gen Z graduating college at a time when asset prices are overvalued and home prices are at their least affordable, it will be interesting to see who ends up in the "haves" and who ends up in the "have nots" and how they got there. A big reason why many members of Gen Z will be consider the "haves" is because they simply chose to live with their parents after college and not in their own apartment.

Let's be real, even with the rise in remote work, most college grads will be flocking to the expensive, coastal cities. Those cities are the most expensive cities in the country. A minority of the people graduating college will go to the Midwest, where housing is cheap but there are fewer job opportunities there. That minority of people moving to the Midwest will achieve home ownership way sooner and will be living in way bigger homes than those living in the cities.

Most college grads will be busy paying down their student debt. Those that choose to live with their parents will have a much easier and quicker time paying down those student loans on their own. Even if you have roommates, living on your own is still more expensive than living with your parents. Besides student loans, those living on their own will be accruing more credit card debt.

When Redfin writes about Gen Z being ahead of Baby Boomers, Millennials, and Gen X in terms of home ownership, they mean that those in Gen Z that were able to buy a home were able to do that in very affordable areas when interest rates were low and economic stimulus was plentiful. They weren't buying homes in the expensive cities like SF, Miami, NYC, etc.

Even with interest rates surging, housing prices haven't fallen lower. But returns on bonds and other fixed income assets have risen. Members of Gen Z, who are taking advantage of the surge in interest rates by buying bonds and higher yielding REITs, will do better than those that don't. Most likely, it's the folks in Gen Z that are living with their parents that will be taking advantage of these times because those living on their own have to now deal with the end of the student loan payment moratorium.

In terms of competition for housing, the environment has only gotten more competitive. According to real estate influencer Julie Chang, homebuyers today are competing against:

  • People with intergenerational wealth
  • DINKs - dual income no kids who both make 6 figures and have been saving for 10+ years. Or have kids but just very high earners
  • Home owners that have a lot of equity in their existing home that they plan to use in their new home purchase
  • Extreme savers. Single people - people who have just diligently saved for many years
  • People that are willing to house hack
  • Baby Boomers looking to downsize in a one-story home in a walkable neighborhood near culture, restaurants, their kids/grandkids
  • Investors looking to buy their next rental property


While it's still too early to tell whether those that choose to live with their parents right out of college will do far better than those who choose to live on their own, I expect the wealth gap within Gen Z to get bigger. With a competitive home buying environment, Gen Z's head start during the pandemic may cool down longer than we expect.
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Gen Z, millennials are ‘house hacking’ to become homeowners in a tough market. How the strategy can help
Gen Zers and millennials are using "house hacking" as a way to secure homeownership in a tough market. Here's how the strategy works.

RIP: Charlie Munger
Sad news to hear about the passing of a great investor teacher and a legendary thought leader.

Charlie Munger was a huge influence in shaping our investment philosophy ... as we're sure he was for many others.

Some of our favourite quotes of his:

"More investors don’t copy our model because our model is too simple. Most people believe you can't be an expert if it's too simple.
How did Berkshire’s track record happen? If you were an observer, you’d see that Warren did most of it sitting on his ass and reading."

"I never allow myself to have an opinion on anything that I don’t know the other side’s argument better than they do."

"If you remove just a few of Berkshire’s top investments, its long-term track record is pretty average"

"If you’re not willing to react with equanimity to a market price decline of 50% two or three times a century, you’re not fit to be a common shareholder and you deserve the mediocre result you’re going to get"

"Warren Buffett has become one hell of a lot better investor since the day I met him, and so have I.
If we had been frozen at any given stage, with the knowledge we had, the record would have been much worse than it is.
So the game is to keep learning, and I don't think people are going to keep learning who don't like the learning process"

There are many more. Thank you Charlie for making us all better investors.
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Saddest day in the history of days! I’m not even joking. This is the biggest hit for me
See more of what you want
Want to Find a Fortress Balance Sheet?
Use these metrics to analyze balance sheets like a pro.

→ Current ratio > 1
→ Asset Turnover > 5%
→ Interest coverage > 5
→ Debt to Assets < 40%
→ Net debt to EBITA < 3
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Macro Chart of The Week
With rising interest rates, what about debt and related interest payments for Corporations & the Consumer? This might surprise many, so let the following sink in:

  • corporations have the LOWEST net interest expense since the 1970s … ‘but, how comes bro? Higher interest rates should mean higher debt servicing costs!’. Well, there is a reason why corporations have treasury departments: many companies had enough time in 2020 & 2021 to negotiate very low fixed rates, and they did it!

  • consumer, similar story: financial obligations as share of income is quite low …

Maverick Charts - Macro & More with the November edition coming out soon to town
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Maverick Equity Research | Substack
Independent Investment Research & Investor. Differentiated reports, trading ideas, lots of charts and educational topics. Risk management & hedging for an all weather portfolio. A Roger Federer fan ... Click to read Maverick Equity Research, a Substack publication with thousands of subscribers.

LVMH article & Final Hours for the BF deal
A brief overview of LVMH $MC $LVMH:

👉LVMH Moët Hennessy - Louis Vuitton is the leading French conglomerate specializing in luxury goods. The diverse portfolio of LVMH encompasses a range of exquisite products, including Fashion & Leather 👜, Wines & Spirits 🍷, Perfumes & Cosmetics 💄, Watches & Jewelry 💎, and Selective Retailing.

👉LVMH operates across the globe with its largest geographic regions being Asia accounting for ~30% of revenue and US accounting for ~27% of revenue for FY22.

👉Its portfolio which includes 75 prestigious ‘Houses’ or ‘Maisons’, comprises among others of brands like Louis Vuitton, Christian Dior, Tiffany & Co, Tag Heuer, Hennessy and Moët & Chandon.

👉LVMH’s houses are broken down into six different sectors, namely: Wines & spirits (9% of FY22 revenue), Fashion & Leather (49% of revenue), Perfumes & Cosmetics(10% of revenue), Watches & Jewelry (13% of revenue), Selective Retailing (19% of revenue) and Other Activities (0% of revenue).

👉Fashion and Leather goods segment is at the core of LVMH, as for 2022, it accounted for roughly 49% (€38.6B) of total revenues and 75% of operating profits, recording an operating margin of 41%.

👉LVMH is run by the Arnault family which owns approximately 48.2% of the Company, equating to 63.9% of the voting power. Since becoming a major shareholder in 1989, Bernard Arnault has been leading LVMH as CEO and Chairman.

👉Key Financials:
-Revenue Trailing twelve months (“TTM”) H1’23: €84.7B, 11.9% CAGR during FY13 to TTM H1’23

-Operating income TTM H1’23: €22.4B (margin of 26.4%), 14.8% CAGR during FY13 to TTM H1’23

-Valuation: LVMH trades at a TTM EV/EBITDA of 13.5x (4 Year average of 16.5x) and a TTM EV/Sales of 4.5x (4 Year average of 5.4x).

If you are interested to read more on LVMH, here is our latest write-up.

Please also note that our BF deal was extended for another 48 hours! Here’s the details👇

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Dissecting LVMH's Dynamic Presence in Luxury
“The luxury strategy aims at creating the highest brand value and pricing power by leveraging all intangible elements of singularity- i.e. time, heritage, country of origin, craftsmanship, man-made, small series, prestigious clients, etc.” Vincent Bastien

Leon's avatar
Frequentis $FQT has realized an innovative drone project in cooperation with Austro Control and ÖBB.

From now on drone garages will be distributed along the ÖBB’s rail network to provide valuable support in case of rockfall and storm damage on a railway.

Depending on the case, the use of drones will result in a huge amount of time saved, therefore minimising line closures.
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$RYCEY - price at 3 dollars.
I pick up this stock at abt 1.75 during the covid period. Due too travel restrictions all airline related companies struggled to survived.

Based on yesterday's price at $3 it's a good 70% up for me. Keeping my fingers crossed that their operational profits stabilize. Watching out for news of Airlines buying Airbus models as well.
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The Investment Checklist: The Art of In-Depth Research
Hey folks, I've read Michael Shearn's book: The Investment Checklist: The Art of In-Depth Research and decided to write kind of a summary splitted into 3 parts.

I would say the book is mainly for investors who already got started but need a wrap up of all the thing they came across with some new insights. Further research on most topics is likely needed as the book gives more of an overview and explains the most important concepts of a topic but doesn’t dive too deep. So for really experienced investors it’s probably more of a overall refresh, for less experienced ones it provides some starting points for diving deeper.

Have a good start into the new week!
Increasing Odds | Saesch | Substack
Sharing my investment journey on how I try to increase the odds of investing successfully and building long-term wealth. Click to read Increasing Odds, by Saesch, a Substack publication. Launched a year ago.

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