Why Airbnb is EXTREMELY Undervalued Part 1: Fundamentals

So less than five years ago, Airbnb’s operations were losing almost a billion dollars a year in cash-flow… But, they flipped that script fast by generating over $2 BILLION in cash-flow the very next year. 

Why Airbnb is EXTREMELY Undervalued Part 1:  Fundamentals
Grok did this ☝🏽

As you can see from the chart below, shares of ABNB have been punished.  I believe  the punishment is misguided and/or shortsighted.  In late 2021, ABNB were trading at over $200.  They would soon start a downward slide that seems overdone if not unwarranted.   The company is growing at every level, and is one of the most profitable and disruptive companies in the world.  With margins that are mouthwatering, and an amazing potential for growth, I believe shares are extremely undervalued.  Earlier this year, prices were approximately $160/share—but today, they’re available for around $130.  

Let’s not forget how far the company has come—and how quickly…Let’s take a quick look at the cash-flows from operations; it’s a great metric to get past the BS that many companies use to twist GAAP accounting into rosier results.  Cash is King for a reason…

2020

- $770M

2021

$2.3B

2022

$3.4B

2023

$3.8B

TTM

$4.3B

So less than five years ago, Airbnb’s operations were losing almost a billion dollars a year in cash-flow… But, they flipped that script fast by generating over $2 BILLION in cash-flow the very next year.  And it wasn’t just due to COVID-19, they were losing money in prior years as well as the company was building up its team and investing in the growth that we have witnessed since then.  Here’s a quick summary of some of their financial highlights.  

METRIC

ABNB

PEERS

Net Income Margins

46% 🤗

< 5% 🤔

ROE (TTM) 

> 74% 🤑

< 12% 🤨

Levered FCF (TTM)

> 30% 😃

5% 🤨

Return on Total Assets

18.4% 👏🏼

4% 😐

EPS Growth (YOY)

> 159% 😍

UNDER 2% 💩

ROE Growth (YOY)

66% 😍

-7% 💩

These numbers are nice, but let’s look at the company via a different lens—let’s see how the stock trades in terms of the charts.  To be continued…