Polen Capital: “Airbnb (ABNB) has a Unique Value Proposition”
Polen Capital, an investment management company, released its “Polen Focus Growth Fund” second quarter 2022 investor letter. A copy of the same can be downloaded here. In the second quarter, the fund returned -23.94% net of fees compared to a -16.10% return for the S&P 500 and -20.92% return for the Russell 1000 Growth Index. Inflation concerns and interest rate hikes led the portfolio to decline in the quarter. In addition, please check the fund’s top five holdings to know its best picks in 2022.
In the second quarter 2022 investor letter, Polen Capital discussed stocks like Airbnb, Inc. (NASDAQ:ABNB). Headquartered in San Francisco, California, Airbnb, Inc. (NASDAQ:ABNB) is an online marketplace to connect hosts and guests. On September 29, 2022, Airbnb, Inc. (NASDAQ:ABNB) stock closed at $106.66 per share. One-month return of Airbnb, Inc. (NASDAQ:ABNB) was -5.94% and its shares lost 36.42% of their value over the last 52 weeks. Airbnb, Inc. (NASDAQ:ABNB) has a market capitalization of $68.209 billion.
Here is what Polen Capital specifically said about Airbnb, Inc. (NASDAQ:ABNB) in its Q2 2022 investor letter:
“Airbnb, Inc. (NASDAQ:ABNB) was one of our largest detractors from performance in the second quarter. Airbnb is the clear market leader in private rental bookings globally, according to market research firm Euromonitor. The business is currently firing on all cylinders, with revenue and earnings growth well above our expectations and long-term estimates. It would be easy to say that it is because as the world reopens, people are traveling for the first time in two years, providing a short-term benefit to the company. But, Airbnb also grew quickly in 2021 when people were still hesitant to travel and preferred staying close to home. The company's growth in 2022 is not an easy comparison like it is for online travel agencies (which are more hotel-oriented), airlines, and hotels. In fact, Airbnb's business has outpaced the 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 scale with robust network effects and a system of trust protecting travelers and hosts alike. It has diligently removed friction from the marketplace to catalyze demand.
The business model has very high incremental profit margins. When the company went public only a year and a half ago, it had pretax profit margins on a non-GAAP3 basis of approximately 5% by our calculations. This year, those margins should approach 30%. In addition, the company has generated approximately $3 billion in free cash flow over the last 12 months. The runway for growth in private rental is very long, especially considering that hybrid work will likely remain for the long-term, allowing for more business/leisure trips that work better in Airbnbs than hotels, in our view…” (Click here to read full text)
Photo by Karsten Winegeart on Unsplash
Airbnb, Inc. (NASDAQ:ABNB) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 57 hedge fund portfolios held Airbnb, Inc. (NASDAQ:ABNB) at the end of the second quarter which was 66 in the previous quarter.
We discussed Airbnb, Inc. (NASDAQ:ABNB) in another article and shared the stock picks of Eduardo Costa’s Calixto Global Investors. In addition, please check out our hedge fund investor letters Q2 2022 page for more investor letters from hedge funds and other leading investors.
Disclosure: None. This article is originally published at Insider Monkey.
