Summary
- BKNG is the leader OTA, ranked 340 in Fortune 500 Rankings with 28m+ listings of properties, and in 2019 reported a NI of $4.8b, having a net cash position.
- The assumptions of our approach use a single-staged five years DCF model relying on a zero-growth rate period of 5 years with a terminal growth of 1.9%.
- One of the main risks we see is their pursuit of a "connected trips" vision where BKNG is trying to inorganically grow other non-accommodation segments via M&A, deteriorating their margins.
- BKNG enjoys a competitive advantage in the accommodation segment due to their disruptive platform and great achievements in the OTA's sector. However, this moat is not necessarily transferable to new segments like Car Rentals, Experiences, and Flights.
- Our Intrinsic valuation is around USD 1,850 per share. We need to guess the execution of the current and future acquisitions, and those executions could be risky, and there are almost no assets to back up the value or any margin of safety.
For further details see:
Booking Holdings And Its Segment-Based Moat