Value proposition

“Airbnb (ABNB) has a unique value proposition”

Capital of Polandan investment management firm, has released its second quarter 2022 “Polen Focus Growth Fund” investor letter. A copy of it can be downloaded here. In the second quarter, the fund returned -23.94% net of fees, compared to a return of -16.10% for the S&P 500 and a return of -20.92% for the Russell 1000 Growth Index. Inflation fears and rising interest rates caused the portfolio to decline during the quarter. Additionally, please see the fund’s top five holdings for its top picks in 2022.

In the Q2 2022 Letter to Investors, Polen Capital discussed stocks like Airbnb, Inc. (NASDAQ:ABNB). Based in San Francisco, California, Airbnb, Inc. (NASDAQ: ABNB) is an online marketplace for connecting hosts and travelers. On September 29, 2022, Airbnb, Inc. (NASDAQ: ABNB) stock closed at $106.66 per share. Airbnb, Inc.’s (NASDAQ:ABNB) one-month return was -5.94% and its shares have lost 36.42% of their value over the past 52 weeks. Airbnb, Inc. (NASDAQ: ABNB) has a market capitalization of $68.209 billion.

Here’s what Polen Capital specifically said about Airbnb, Inc. (NASDAQ:ABNB) in its Q2 2022 Letter to Investors:

Airbnb, Inc. (NASDAQ:ABNB) was one of our main detractors from performance in the second quarter. Airbnb is the undisputed market leader in private rental bookings worldwide, according to market research firm Euromonitor. The business is currently running at full steam, with revenue and earnings growth well above our long-term expectations and estimates. It would be easy to say it’s because as the world reopens, people are traveling for the first time in two years, which provides a short-term benefit to the business. But Airbnb also saw rapid growth in 2021 when people were still hesitant to travel and preferred to stay close to home. Business growth in 2022 is not an easy comparison as it is for online travel agencies (which are more hotel-focused), airlines and hotels. In fact, Airbnb’s business has outpaced hotel industry growth by more than 1,250 basis points per year since 2019, showing far more resilience than hotels and online travel agencies.

Airbnb didn’t invent the private rental market, but it developed a better offering and helped it evolve with robust network effects and a trust system that protects guests and hosts. He diligently removed market frictions to catalyze demand.

The business model has very high incremental profit margins. When the company went public just a year and a half ago, it had pretax profit margins on a non-GAAP3 basis of around 5% by our calculations. This year, these margins should approach 30%. Additionally, the company has generated approximately $3 billion in free cash flow over the past 12 months. The growth streak for private rental is very long, especially considering that hybrid working is likely to remain in the long term, enabling more business/leisure travel that works better in Airbnbs than in hotels, in our view. …” (Click here to read the full text)

Airbnb, Rent, House, Real Estate

picture by Karsten Winegeart on Unsplash

Airbnb, Inc. (NASDAQ: ABNB) is not on our list of 30 most popular stocks among hedge funds. According to our database, 57 hedge fund portfolios owned Airbnb, Inc. (NASDAQ: ABNB) at the end of the second quarter, up from 66 in the prior quarter.

We discussed Airbnb, Inc. (NASDAQ:ABNB) in another article and shared Eduardo Costa’s Calixto Global Investors stock picks. Additionally, please see our Letters to Hedge Fund Investors Q2 2022 page for more letters from hedge fund investors and other leading investors.

Disclosure: None. This article originally appeared on Insider Monkey.