ABNB - Powell Boosters Engaged - To The Moon
ABNB is poised for a serious breakout to the upside (that makes the rise since late november seem like kiddie play). With Grand Head Poobah Fed Chairman Powell hinting about not one, not two, but THREE rate cuts coming in 2024 (after all, it is an election year)...
The Federal Reserve anticipates a significant reduction in interest rates by next year, suggesting the possibility of three rate cuts in 2024. However, the Fed also predicts that inflation won't stabilize at the targeted 2% rate until 2026, raising questions about the timing of rate cuts. Fed Chair Jerome Powell explained that since rate hikes have a delayed effect on the economy, waiting for inflation to drop to 2% could result in overly high rates for an extended period, risking a recession. Powell, during a press conference, emphasized the need for proactive rate adjustments before reaching the 2% inflation rate to prevent late policy intervention.
So, what does that mean. It means the fed doesn't give a flip about inflation, so people will be flocking to assets...(gold went up 660/OZ in like 3 hours after the announcement)...andasset prices will continue to rise...the underlying rents that are associated with those assets will continue to rise...and guess who's sitting on top of the vacation rental market all fat and happy - AirB to the B.
From a financial valuation standpoint, AirBNB's free cash flow is going to go absolutely bananas. They were talking about hosting rental rates dropping 30% YoY because of the crazy interest rate hikes the fed has been imposing - and guess what - ABNB's revenue still soared 18% YoY - what do you think will happen when rates start to find a middle ground, or better yet, return to their summer '22 levels. It doesn't take a math whiz to understand that ABNB is poised to print money - yet, they're dramatically undervalued.
Despite the hiccup, ABNB's revenues increase 18% YoY in Q3 - prices go down 20-30%...yet revenues go up 18%...then add to the fact that of the 8.7B the company raked in, in Q3 - 38% is free cash flow - cash flow the company has used over the last year to buy back almost 3% of its shares.
Value? You want it, you got it. Consider these Price to Free Cash Flow ratios:
MSFT: 43.97
AAPL: 30.55
NVDA: 69.68
TSLA: 238.88
NFLX: 37.45
AMZN: 73.4
...ABNB crushes every last one: 22.86 WUT?!?!
Now for the exciting part...fair valuation. Dump TSLA because the valuation is an outlier, and the average FCF to price ratio of MSFT, AAPL, NVDA, NFLX, and AMZN is 51.01 - ABNB's stock price at that ratio is...
$329.04 <insert shocked emoji>
Expect ABNB to easily blow past it's former all time high from Feb of '21 at $216.84, and where were we on this day in December of '20 - at almost an identical level $157.
Moral of the story, take out a 2nd mortgage and don't put it towards an airbnb investment property - put in all in ABNB!
The Federal Reserve anticipates a significant reduction in interest rates by next year, suggesting the possibility of three rate cuts in 2024. However, the Fed also predicts that inflation won't stabilize at the targeted 2% rate until 2026, raising questions about the timing of rate cuts. Fed Chair Jerome Powell explained that since rate hikes have a delayed effect on the economy, waiting for inflation to drop to 2% could result in overly high rates for an extended period, risking a recession. Powell, during a press conference, emphasized the need for proactive rate adjustments before reaching the 2% inflation rate to prevent late policy intervention.
So, what does that mean. It means the fed doesn't give a flip about inflation, so people will be flocking to assets...(gold went up 660/OZ in like 3 hours after the announcement)...andasset prices will continue to rise...the underlying rents that are associated with those assets will continue to rise...and guess who's sitting on top of the vacation rental market all fat and happy - AirB to the B.
From a financial valuation standpoint, AirBNB's free cash flow is going to go absolutely bananas. They were talking about hosting rental rates dropping 30% YoY because of the crazy interest rate hikes the fed has been imposing - and guess what - ABNB's revenue still soared 18% YoY - what do you think will happen when rates start to find a middle ground, or better yet, return to their summer '22 levels. It doesn't take a math whiz to understand that ABNB is poised to print money - yet, they're dramatically undervalued.
Despite the hiccup, ABNB's revenues increase 18% YoY in Q3 - prices go down 20-30%...yet revenues go up 18%...then add to the fact that of the 8.7B the company raked in, in Q3 - 38% is free cash flow - cash flow the company has used over the last year to buy back almost 3% of its shares.
Value? You want it, you got it. Consider these Price to Free Cash Flow ratios:
MSFT: 43.97
AAPL: 30.55
NVDA: 69.68
TSLA: 238.88
NFLX: 37.45
AMZN: 73.4
...ABNB crushes every last one: 22.86 WUT?!?!
Now for the exciting part...fair valuation. Dump TSLA because the valuation is an outlier, and the average FCF to price ratio of MSFT, AAPL, NVDA, NFLX, and AMZN is 51.01 - ABNB's stock price at that ratio is...
$329.04 <insert shocked emoji>
Expect ABNB to easily blow past it's former all time high from Feb of '21 at $216.84, and where were we on this day in December of '20 - at almost an identical level $157.
Moral of the story, take out a 2nd mortgage and don't put it towards an airbnb investment property - put in all in ABNB!
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