Time to get in bed with Airbnb?

2021 looks brighter than 2020 Wall Street Connected Profit Like The Pros Brought to you by: Wall Street’s graveyards are filled with men who were right too soon – William Hamilton Dear subscriber, 2020 was a tough year for Airbnb Inc (ABNB). [You Dont Say Nicholas Cage GIF] Revenues plummeted ~30%. Net income losses spiked from $674 million to $4.585 billion. But if we look beneath the covers, things weren’t actually that bad. Institutional Advisors made ABNB one of their top search results this week according to our TrackstarIQ data coming in 5th. With shares sitting below their opening price from their IPO back in December, we figured it was time to take a second look at this hot stock. It turns out, there’s more here than meets the eye. The truth behind the numbers At a quick glance, the income statement for the most recent quarter looks abysmal. Net losses jumped almost 250%. The only reason EPS didn’t plummet is they added more shares which diluted the losses. But as any good finance professor will tell you, bills are paid with cash. That’s why the cash flow statement paints an entirely different picture. We highlighted several major items. These are all one-time expenses with the exception of unearned fees which is seasonal. These major impairments come from items including: - $377 million loss related to the repayment of term loans - $292 million mark-to-market adjustment for warrants associated with a term loan - $113 million impairment related to office space in San Francisco - $229 million related to stock-based compensation. All of these added up to $782 million in items unrelated to ongoing operations. Excluding just these items, we’re left with a loss of $383.9 million compared to the prior year at $340.6 million. Outlook In Q1, 2021, ABNB processed 75% more bookings than the prior quarter. Nights booked through the platform surged 39%. Their average daily rate increased 25% quarter over quarter. All this illustrates a growing trend amongst hotel and leisure - pent-up demand is real. People want to get back to their normal lives. And with many forgoing vacations for all of 2020, 2021 looks much busier. In their latest report, the company expected adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) to be lower in the first half than the second due to seasonality and investments. However, the company expects to turn a breakeven or slightly positive EBITDA in the second half, a huge milestone for the company. Competition Without positive earnings, we tend to evaluate companies against their peers through price to sales ratios or similar metrics. In that regard, ABNB comes in a bit more expensive than similar companies. What’s worth noting is the growth rate for ABNB is expected to far outpace the competition due to its specific niche. Our hot take Airbnb is an interesting opportunity. Given the potential to turn profitable in the next couple of years and the unique business model, this could be a winner over the next decade. Sponsored [Could this change the way you invest forever?]( Find out what the Motley Fool has in store [Click to learn more about our "All In" buy alert.]( What we’re watching [Wall Street Connected: Pfizer]( Today's company is one that's playing a big part in the fight against Covid-19 - Pfizer. The main story for this company was the Biden administration’s support for waiving IP protections. [Watch Now]( OUR RECENT POSTS [Big Lots value is deceiving]( Unpacking the discount retailer [Read more]( [This semiconductor stock is dirt cheap]( Everyone dismissed this semiconductor name [Read more]( - The Editorial Staff # [submit to reddit]( [submit to reddit]( [submit to reddit]( Update your email preferences or unsubscribe [here](#). View our privacy policy [here](#). Copyright ©2021 InvestingChannel. All rights reserved. 1325 Avenue of the Americas, Floor 27 & 28 New York, New York 10019 Disclaimer: This is not investment advice. This InvestingChannel, Inc. newsletter is for information purposes only and opinion-based. Futures, forex, stock, and options trading are not appropriate for all investors. There is a substantial risk of loss associated with trading these markets. Losses can and will occur. No system or methodology has ever been developed that can ensure returns or against losses. No representation or implication is being made that using any of these methodologies or systems will generate returns or ensure against losses. Investors should be cautious about any and all investments and are advised to conduct their own due diligence prior to making any investment decisions. [Link](