2024-01-30 08:30:00 ET
Summary
- Today, we will consider Airbnb through a few different lenses.
- We will start with a consideration of Airbnb through the lens of the great Peter Lynch's favorite kind of businesses.
- We will then consider the business through the lens of its vectors for growth, such as its expansion into international markets.
- And we will conclude with a consideration of the business' valuation.
- In short, while I don't love Airbnb stock at these levels, I think investors will do alright buying here.
Fast Growers & Boring Markets
I recently shared an excerpt from Peter Lynch's One Up On Wall Street, in which he shared his favorite type of company, which he referred to as "Fast Growers."
The Fast Growers
These are among my favorite investments: small, aggressive new enterprises that grow at 20 to 25 percent a year. If you choose wisely, this is the land of the 10- to 40-baggers, and even the 200-baggers. With a small portfolio, one or two of these can make a career.
A fast-growing company doesn't necessarily have to belong to a fast-growing industry. As a matter of fact, I'd rather it didn't, as you'll see in Chapter 8. All it needs is the room to expand within a slow-growing industry. Beer is a slow-growing industry, but Anheuser-Busch has been a fast grower by taking over market share, and enticing drinkers of rival brands to switch to theirs. The hotel business grows at only 2 percent a year, but Marriott was able to grow 20 percent by capturing a larger segment of that market over the last decade.
The same thing happened to Taco Bell in the fast-food business, Wal-Mart in the general store business, and The Gap in the retail clothing business. These upstart enterprises learned to succeed in one place, then to duplicate the winning formula over and over, mall by mall, city by city. The expansion into new markets results in the phenomenal acceleration in earnings that drives the stock price to giddy heights.
One Up On Wall Street by Peter Lynch (Must Read if you're taking this investing journey with me)
Read the full article on Seeking Alpha
For further details see:
Airbnb: Airbnboomin', Competitive Advantage, Solid Moat