{"id":69000,"date":"2023-10-05T09:11:18","date_gmt":"2023-10-05T13:11:18","guid":{"rendered":"https:\/\/ifintechworld.com\/news\/this-is-what-airbnb-has-in-common-with-costco-and-amazon-nasdaqabnb\/"},"modified":"2023-10-05T09:11:24","modified_gmt":"2023-10-05T13:11:24","slug":"this-is-what-airbnb-has-in-common-with-costco-and-amazon-nasdaqabnb","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=69000","title":{"rendered":"This Is What Airbnb Has In Common With Costco And Amazon (NASDAQ:ABNB)"},"content":{"rendered":"
\n

<\/picture>
<\/figcaption><\/figure>\n<\/p>\n

Introduction<\/h2>\n

A year ago, I shared on Seeking Alpha the reasons why I am long Airbnb (NASDAQ:ABNB<\/span>). The stock has gone through high volatility since then, trading down into the $80s and then moving back up to $150, before retracing back to the current level. Recently, Airbnb has been <\/span>added to the S&P500. The stock rose and now, as many expected, it is seeing a strong pullback.<\/span><\/p>\n

Many things can be said about Airbnb. For sure, it is a company with a very successful business and I have gone over the favorable macrotrends that benefit it. However, in this article, I would like to go over a few aspects of how Airbnb works that make it similar to two of my core holdings: Costco (COST) and Amazon (AMZN).<\/p>\n

Summary of previous coverage<\/h2>\n

Since I don’t write often about Airbnb, some SA readers interested in the stock may now know my investing style and why Airbnb is in my portfolio, though it may seem a bit of an outlier.<\/span><\/p>\n

My portfolio is mainly built around two pillars: high profitability and dividend growth. Some may argue that companies whose profitability is high should not pay a dividend because they can invest their cash into their business at high rates. Yet, highly profitable businesses usually end up generating a growing amount of excess cash that can be returned to the shareholders.<\/p>\n

Now, Airbnb is no dividend payer (though it has initiated a buyback program). However, it is in my portfolio because its profitability and its growth trajectory make me consider it as one of the winners of the next decade.<\/p>\n

In particular, Airbnb is one of the few growth companies able to couple growth with low debt and high returns on capital employed. This is a setup able to make a company flourish. In fact, Airbnb was able to recover from the pandemic much quicker than Booking and Expedia. Moreover, it is a founder-led company and its CEO, Brian Chesky has told more than once how the pandemic was a turnaround point for his company to focus on its core business.<\/p>\n

Now, alongside my coverage on Airbnb, I have to recall some of my past research on Costco and Amazon. In fact, I have been going through both companies, starting from understanding how Costco influenced Amazon Prime. Here I went over the ecosystem created by the membership and explained how Jeff Bezos was inspired by Costco during Amazon’s early stages. Having understood Costco, Amazon has been able to expand Costco’s business model creating an ecosystem, the likes of which are difficult to find.<\/p>\n

Latest financials<\/h2>\n

Before Airbnb released its 2022 Annual Report, I gave a forecast. In this table, you can see my estimates and what Airbnb actually reported.<\/p>\n

<\/span><\/p>\n\n\n\n\n\n\n
(in USD billion, except per share amounts)<\/strong><\/td>\nMy estimate<\/strong><\/td>\nAs reported<\/strong><\/td>\nSurprise<\/strong><\/td>\n<\/tr>\n
Revenue<\/td>\n8.5<\/td>\n8.4<\/td>\n-1.1%<\/td>\n<\/tr>\n
Net income<\/td>\n1.8<\/td>\n1.9<\/td>\n+5.5%<\/td>\n<\/tr>\n
FCF<\/td>\n2.8<\/td>\n3.4<\/td>\n+21.4%<\/td>\n<\/tr>\n
EPS<\/td>\n2.80<\/td>\n2.97<\/td>\n+6.1%<\/td>\n<\/tr>\n<\/table>\n

<\/span><\/span>