4. Airbnb, Inc. (NASDAQ:ABNB)
Number of Hedge Fund Holders: 63
Airbnb (NASDAQ:ABNB) operates a globally recognized platform that connects hosts and guests. The company facilitates a wide range of accommodations and experiences. The marketplace is accessible through both online and mobile platforms.
It allows users to book various options, including private rooms, primary residences, and vacation homes. During September 30’s Mad Money episode, Cramer suggested to “buy a little more” of Airbnb, Inc. (NASDAQ:ABNB), mentioning it being down 7% over the past year and that he likes it.
Cramer emphasized that the company is run by Co-Founder Brian Chesky and called him conservative. Under the leadership of Chesky, the company has navigated significant challenges, including a unique venture into breakfast cereals during a financially difficult period in 2008 to keep the business afloat.
Recently, during his address at the 2024 Skift Global Forum, Chesky posited a vision for the company’s future and said that a new phase of the company is coming. He expressed optimism about the potential for innovation, projecting that the company might unveil two to three initiatives each year capable of generating an additional billion dollars in revenue annually.
Chesky emphasized the importance of promoting the advantages of hosting and advancing the tools available to hosts. The focus has contributed to a significant increase in active listings, surpassing 8 million in the second quarter, driven by growth in various markets around the world.
Under Chesky, the company has expanded in under-penetrated markets, an important area of focus, with performance in these regions outpacing core markets in terms of gross nights booked. It is also important to note that Airbnb (NASDAQ:ABNB) exceeded expectations in the second quarter, generating $1 billion in free cash flow and reported revenue of $2.75 billion, an 11% year-over-year growth.
Polen Capital stated the following regarding Airbnb, Inc. (NASDAQ:ABNB) in its first quarter 2024 investor letter:
“During the quarter, we initiated new positions in Sage Group and Airbnb, Inc. (NASDAQ:ABNB) and added to our existing position in Globant.
Airbnb is a great business model, according to our research, due to its two-sided global network effects. For several reasons, Airbnb has a better mousetrap with its supply growth engine, with its hosts having a far lower cost of capital and more flexibility than hotels. We think private rentals should continue to grow their share of overall accommodation stays, potentially up to 30% of lodging or higher over the long term, letting the private rental gross booking value grow at a low double-digit rate. We also think Airbnb should continue to gain share within the private rental market as its global network effects strengthen, allowing for mid-teens revenue growth. With flat to rising margins over time, significant free cash flow generation, and a management team that has demonstrated its owner orientation, this should result in high-teens EPS growth over time. While the path there will not be linear, and it is a more discretionary spending-tied business, we think the long-term secular growth opportunity is very compelling.”
