Table of Contents & Ground Rules
The point of this investment thesis is to have clarity on whether to invest in Airbnb, and why. Too many people “invest” by just punting based on spurious factors such as recent price movements, superficial valuation multiples, or hearsay from talking heads in media. Ultimately, it’s about decomposing the stock price into EXPECTATIONS that are baked in, and then answering the question “are these baked-in-expectations too optimistic or too pessimistic?”
Digging in – to the expectations that are baked into stock prices – takes time and effort. Most people don’t have the time or patience for this. But we love it!
Let us do the heavy lifting, so you don’t have to.
Here are the contents of the investment thesis:
- Thesis Summary
- Latest Earnings Report
- Ok! What needs to happen?
- Comfortable Business?
- Competitive Advantage & Moat
- Management Strategy
- Growth Drivers
- Key Risk
- Financial Model Risk
- Revenue growth we can believe
- Revenue: Moving Parts
- Revenue Growth Matrix
- Sanity Check: Nights & Experiences
- Sanity Check: Average Daily Rate
- Sanity Check: Take Rate
- Sanity Check: Gross Margin
- Sanity Check: Fixed Costs
- Cash Flow Summary
- Cash Flow Details
- Cash Flow Notes
- Our minimum return requirement is: cumulative return of 50% in less than 5 years.
- Based on this return requirement, we ask ourselves, “What do we need to believe about the fundamentals of the business to achieve our return requirement (or more)?”
- Then we answer the important question: "how easily can we believe it?"
Before we dig in, here’s a free snippet from one of the sections below. We believe that if this scenario comes to pass (or if the market believes it will), there is significant upside in Disney’s stock. Do you believe this is possible? Probable?