SUMMER is coming - What could be the next play for the year?

The GREAT OUTDOORS THEME something that we have been researching on with our members that involves travel rebound and such related stocks could be the next investment play for the year as growth in earnings is to be expected from here on out. As mentioned during the previous Technical Tuesday FB Live on 1st June the investment we are incredibly bullish on is $ABNB - Airbnb. This is a brand that needs no introduction, have made millionaires through their platform from fully utilizing their properties but have been beaten down badly in 2020 due to covid.

Overview
The 'Uber of Property', Airbnb is a platform where anyone can utilize their own properties to generate income: rental transactions without ABNB owning any inventory. They basically charge Hosts a 3% fee upon a successful transaction of renting their property out via ABNB platform and charges guests a 14% fee with a similar transaction. 2017 valuations reached $31B but then dropped significantly to $18B in 2020 due to the global pandemic and were forced to lay off 25% of their staff (1,900 people) and faced problems with the hosts as bookings were cancelled and bookings could not be refunded.
In Dec 9th 2020 Airbnb finally got listed which drove stock prices up from $144 to reaching a high of $219 and then back down again to $140-$150 levels with a market cap currently of $90B. Below is the summary of my bullish thesis (qualitative) with certain risks as mentioned during the Live:

1) In 2019 international tourist arrivals reached 1.47B which then plummetted to only 394M people due to the global pandemic. But with more people worldwide and more so in the US getting vaccinated do we see the travel industry picking up?
Stats from 4 days ago: Already 63% of adult Americans have received at least one shot, and 52% of adult Americans are fully vaccinated. Already 12 states have 70% of adults with at least one shot.

This trade idea revolves around what we think will be a HUGE travel rebound happening this year and the years to come as people are DEPRIVED of travelling outside to meet their loved ones and now can do so after getting vaccinated.

2) Airbnb is not only a market leader within the space but survives better vs their competitors during bad times when revenues were down 50% for Expedia and 44% for booking . com - ABNB only saw a 20-30% decline in their revenues.

3) In Jan 2020 monthly site visits to ABNB alone were 50.2M compared to their closest competitor VRBO (A site mostly boomers visit) only at 14.7M

4) 90% of Airbnb sales is organic because people go directly to their sites when surfing compared to their competitors booking . com and expedia that pay google % of revenues just because they visit their website via google first. This is not only free cost of acquisition but also can lead to command better pricing power to their hosts and guests which leads to: increasing prices w/o losing customers, being price setters, huge way to grow organically and positioned to grow for the long term - characteristics of a quality growth company.

5) Picture this:
Mariott Hotels 1.2m rooms worldwide
Hilton Hotels 1.02m rooms worldwide
Airbnb: 4m hosts worldwide as of Mar 31 2021 (1m hosts more since 2019)!
With 5.6m Listings worldwide these numbers are insane and shows just how powerful a platform is without owning inventory. All they need to do to secure more hosts which increases TAM and potential revenue is upgrade their system to make it more user friendly (which they have) to get them onboard in 5 minutes or less! These asset light companies in our opinion is the future with low capex and only opex driven (labour intensive).

6) Monster multiple TAMs that they can capture and Huge revenue growth in a fast pace expected as most parts of the world is recovering - will fuel this even more from here. Another characteristic of good growth companies with clearer path to profitability.

7) Business travel is no longer the same due to covid and the nature of travel judging from the way people are making their bookings through Airbnb - seems that they are mixing leisure with work as the 'work from home' trend increases thus adopting the trend of 'work from anywhere' instead of staying in their own homes they can travel and work at the same time at any given destination or state instead of the luxury hotels. Some stats to back this up: 24% of ABNB bookings are longer than 28 days!! An increase of 10% a year ago. How insane is that? Establishing the fact that people are ready to work and travel at the same time as things get more flexible within their company.

8) 11% of their bookings are found to be nomadic living (people jumping from home to home and travelling rapidly throughout - a wanderer). This nomadic living trend will soon increase during the summer and beyond in line with the whole travel rebound concept

9) Cross Border Travel restrictions are lifted (on land but not on air) and tourists expected to travel more to Mexico and Canada.

10) ABNB have done surveys of US and around the world on people's travel plans acquiring data on how and where they expect to travel and found that not only are they going to be staying longer - they are willing to spend MORE in bigger & smaller cities alike. People are spending more by 30% a night in urban areas. Seattle seen an increase in long term stays by 40%, LA 43%, NY 62% and smaller towns = 35% increase. Travel is different than before with people being more flexible to where and when they travel even during working times. Whenever people travel to smaller towns and rural communities which platform do you think they will use essentially? Airbnbs

11) This is why ABNB just had a major upgrade to their system that was just launched on 24th May with 100+ upgrades for hosts and guests - they are expecting a huge influx of transactions for the summer! They launched upgrades known as Flexible Matching and Flexible Destinations all to match hosts and guests easier and finding more of what the guests want with more variety of options.

12) Through their structured and location data guests can now surf the listings easier and can stay in fancy destinations such as yurts, private islands, boats or even be a cowboy for a weekend and many more. Check out their upgrades here: https://bit.ly/34YFSXa

13) Part of their upgrades which backs this thesis up is that they can enable a host to enroll in their platform in 10 easy steps! The adoption of 1m inventory in 2 years will be quicker now expanding their TAMs

14) Upgrades also include new machine learning embedded tools to auto analyze each photo that the hosts uploads of their property by order of quality to optimize which photo will pop out best to attract guests while they search for listings. This also makes it easier for hosts to get booked!

15) In Q1 2021 50% of hosts have booked their listings within 4 days! This was BEFORE the upgrade - can we imagine how their transactions will be easier and faster with the upgrades here especially during the summer? It's going to be insane. I think this is the way Brian Chesky wants to repay their hosts by helping them even more due to the covid outbreak. If a host is giving out a good deal and encouraging more people to stay, ABNB will bump them up in searches and listings.

16) ABNB actually sells unique travel experiences rather than just rentals where in the video link above they show how you can be a cowboy for the weekend for those that want to experience it. Feeding a horse, burning wood for fire etc. They innovate the way of travel by promoting more unique home stays.

17) Property prices in US are rising rapidly which means normal rentals are not working anymore due to high monthly mortgage payments - leading more people to generate income from their homes via ABNB. We see this increase in adoption more and hosts will benefit as they can pay fetch rates better than their rentals and faster.

18) Revenue breakdown geographically - 48% of revenues come from the US and the rest internationally, this great outdoors thesis plays out more within the US which is a good sign and we see this 48% increasing more this year with all the factors mentioned above

Risks are that hosts do not like this adoption and there will be more protests similar to the ones happening in Barcelona. Home communities will not like their neighbourhoods getting flooded with Airbnb properties as it encourages foreign more unfamiliar people riding within their communities. The biggest risk to me is their current valuation standing at $90B, with Revenues only at $3.38B since 2020 this leaves a huge P/S gap and widens the margin of safety as we are unclear of when they expect to be profitable. All in all I personally am very bullish in the travel rebound + great outdoors play for the year and expect a growth in earnings and have started a position in ABNB. It is important to note that they are not just a company with huge potential but they are also operating like a huge start up: aggressive, innovative and disrupting their own fields.

What are your thesis and risk factors on ABNB? Please do share out as we hope you can poke holes through our thesis and have a quality discussion to further stress test this idea. We have created a :100:fy-public-stock-chat:chart_with_upwards_trend: on discord: https://bit.ly/3cmoT59 feel free to join so that we can have discussions there!

*Note this is NOT a buy or sell call and we are not financial advisors. Please do your own research