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Is it Wise to Invest in Airbnb (ABNB)?

·3 min read

Brick By Brick Capital, an investment management firm, published its second-quarter 2022 investor letter – a copy of which can be downloaded here. Performance through the mid-year and July 30th was -22.13% and -17.33% respectively. While the fund's main benchmark ARKK was down -58% and -52.99% respectively also during that time frame. Go over the fund’s top 5 positions to have a glimpse of its finest picks for 2022.

In its Q2 2022 investor letter, Brick By Brick Capital mentioned Airbnb, Inc. (NASDAQ:ABNB) and explained its insights for the company. Founded in 2008, Airbnb, Inc. (NASDAQ:ABNB) is a San Francisco, California-based vacation rental company with a $72.6 billion market capitalization. Airbnb, Inc. (NASDAQ:ABNB) delivered a -31.74% return since the beginning of the year, while its 12-month returns are down by -28.08%. The stock closed at $113.64 per share on September 02, 2022.

Here is what Brick By Brick Capital has to say about Airbnb, Inc. (NASDAQ:ABNB) in its Q2 2022 investor letter:

"What is millennial tech?

It is a term I have coined to describe the type of companies I research. It is a disruptive technology that is changing the status quo of a given industry. For example, Airbnb (NASDAQ:ABNB) with the lodging industry. This definition casts a wide net in terms of what sectors I look at, but it is very specific in terms of what type of companies I look at. I also believe focusing on these companies gives me an inherent edge over Wall St. as they are often older and disconnected from what is truly innovative.

Small-to-mid cap companies

This refers to the size of the underlying company and specifically companies whose market capitalization are under $10 billion. Now $10 billion is a huge number, but for example Airbnb has a $74 billion market cap.

These small to mid-cap companies are often under-followed by Wall St. and therefore lead to opportunities to make money. This is because the lack of coverage creates fundamental misunderstandings about the businesses, which then creates a divergence between the stock price and underlying business prospects. Also, many investment managers cannot own these smaller stocks due to their own mandates, which I feel gives me an inherent edge as there are less eyeballs on the name and therefore information gaps that I can uncover.

Many assume there is a multitude of factors that make stocks go up or down when in reality it all boils down to one singular thing."

Airbnb, Rent, House, Real Estate
Airbnb, Rent, House, Real Estate

Photo by Karsten Winegeart on Unsplash

Our calculations show that Airbnb, Inc. (NASDAQ:ABNB) fell short and didn’t make it on our list of the 30 Most Popular Stocks Among Hedge Funds. Airbnb, Inc. (NASDAQ:ABNB) was in 57 hedge fund portfolios at the end of the second quarter of 2022, compared to 66 funds in the previous quarter. Airbnb, Inc. (NASDAQ:ABNB) delivered a -5.17% return in the past 3 months.

In August 2022, we also shared another hedge fund’s views on Airbnb, Inc. (NASDAQ:ABNB) in another article. You can find other investor letters from hedge funds and prominent investors on our hedge fund investor letters 2022 Q2 page.

Disclosure: None. This article is originally published at Insider Monkey.