Brad Freeman
Equity Researcher, Creator of Stock Market Nerd
Airbnb is a value trap. The stock has been flat for five years, and signs of the promised revenue acceleration from new products are limited. Now CEO Brian Chesky is starting a new AI lab to develop models while remaining CEO, per @negligible_cap, a side project that shareholders should find annoying. x.com x.comÂ
Airbnb's turn to American Express suggests it is about to abuse shareholders. American Express is the new Costco, where dying brands go to rot. x.com x.comÂ
Airbnb is definitely not undervalued, because growth is slowing and there is likely little margin expansion to offset the revenue deceleration. It trades at 15x NTM EBITDA and 28x NTM EPS, with EBITDA expected to grow at a 12% CAGR and EPS at 19% over the next 2-3 years. The chart would get a little interesting above $144 on the daily, and very interesting if it breaks the downtrend from its all-time high more than five years ago. x.comÂ
Airbnb may have found its stride, and in a period of rapid change it pays to back the companies that are executing. On the Q2 call, CEO Brian Chesky said the company is innovating faster than it ever has. x.comÂ
Airbnb is losing ground to hotels and other aggregators that compete without hidden fees. Over five years, Marriott returned 173% and Hilton 163% versus 18% for Airbnb, per @Fiscal_ai. x.comÂ
Airbnb is off-limits because AI agents could disrupt bookings. That view could change if the company adapts, pivots and proves it wrong. x.comÂ
Airbnb's long underperformance is ending: it was too expensive at its IPO and has had to work through and digest those expectations, which is about to change. x.comÂ
Marriott, Hilton and Hyatt hold an edge over Airbnb because users, including this one, dislike Airbnb's lack of customer service and refund terms. Airbnb refunds only 50% on cancellation, while most hotel chains give a full refund up to three days before. Airbnb's profitability remains a concern until it decides to grow up, which it can and likely will. x.com x.comÂ
Airbnb's long-run outlook looks less promising as its prices have climbed close to those of hotels. @BourseWayne says he barely uses the platform anymore because prices have exploded toward hotel levels, while hotels offer far better service; hotels are now the clear preference. x.com x.comÂ
Airbnb is finally getting respect for one of the largest moats around. It is founder-led and innovating, buys back 2-3% of its float a year with a very high free-cash-flow margin, and shows consistent growth across all key and emerging markets. x.comÂ
Airbnb is expensive against its cash earnings, trading at 36x, and 30x next year's, while the industry usually gets 12x. Fair value sits around $74.72 to $95.10, about 12x next year's cash earnings give or take 12%, so the stock is priced 94% above fair. This is a levels-only read off reported earnings and revenue estimates, with no fundamental work. x.comÂ
