⁠Dimitry Nakhla | Babylon Capital®
A quality valuation analysis on $ABNB 🧘🏽‍♂️

•NTM P/E Ratio: 32.66x
•2-Year Mean: 31.82x

•NTM FCF Yield: 5.84%
•2-Year Mean: 4.70%

As you can see, $ABNB appears to be trading near fair value

Going forward, investors can expect to receive ~3% LESS in earnings per share & ~24% MORE in FCF per share🧠***

Before we get into valuation, let’s take a look at why $ABNB is a quality business

BALANCE SHEET✅
•Cash & Equivalents: $11.49B
•Long-Term Debt: $0

$ABNB has an excellent balance sheet

RETURN ON CAPITAL❌➡️✅
•2020: (65.7%)
•2021: 7.5%
•2022: 24.0%
•2023: 14.5%
•2024: 23.8%
•LTM: 24.4%

RETURN ON EQUITY❌➡️✅
•2020: (172.2%)
•2021: (9.2%)
•2022: 36.6%
•2023: 69.8%
•2024: 31.9%
•LTM: 32.1%

$ABNB has improved its return metrics, highlighting the financial efficiency of the business

REVENUES✅
•2019: $4.81B
•2024: $11.10B
•CAGR: 18.20%

CASH FROM OPERATIONS✅
•2019: $0.22B
•2024: $4.52B
•CAGR: 81.47%

NORMALIZED EPS ESTIMATES✅
•2024: $4.11
•2027: $5.69
•CAGR: 11.45%

SHARE BUYBACKS❌
•2019 Shares Outstanding: 260.56M
•LTM Shares Outstanding: 639.50M

MARGINS✅
•LTM Gross Margins: 82.8%
•LTM Operating Margins: 22.2%
•LTM Gross Margins: 22.6%

***NOW TO VALUATION 🧠

As stated above, investors can expect to receive ~3% LESS in EPS & ~24% MORE per share

Using Benjamin Graham’s 2G rule of thumb, $ABNB has to grow earnings at a 16.33% CAGR over the next several years to justify its valuation

Today, analysts anticipate 2024 - 2027 EPS growth over the next few years to be less than the (16.33%) required growth rate:

2025E: $4.23 (2.9% YoY)
2026E: $4.84 (14.4% YoY)
2027E: $5.69 (17.7% YoY) *FY Dec

$ABNB has an great track record of meeting analyst estimates ~2 years out, so let’s assume $ABNB ends 2027 with $5.69 in EPS & see its CAGR potential assuming different multiples

33x P/E: $187.77💵 … ~11.5% CAGR

32x P/E: $182.08💵 … ~10.2% CAGR

31x P/E: $176.39💵 … ~8.8% CAGR

30x P/E: $170.70💵 … ~7.4% CAGR

29x P/E: $165.01💵 … ~6.0% CAGR

As you can see, we’d have to assume >32 earnings for $ABNB to have double digit CAGR potential

I believe $ABNB could reasonably demand a 30x - 32x multiple (given its growth rate, margins, & strong UI and brand), yet current price & estimates don’t leave us with a margin of safety

Today at $142💵 $ABNB appears to be trading for fair value & is a fair consideration for investment

Yet, I would consider $ABNB closer to $126💵 where I can potentially expect double-digit CAGR assuming a 29x end multiple in 2027

#stocks #investing
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𝐃𝐈𝐒𝐂𝐋𝐎𝐒𝐔𝐑𝐄‼️: 𝐓𝐡𝐢𝐬 𝐢𝐬 𝐍𝐎𝐓 𝐈𝐧𝐯𝐞𝐬𝐭𝐦𝐞𝐧𝐭 𝐀𝐝𝐯𝐢𝐜𝐞. 𝐁𝐚𝐛𝐲𝐥𝐨𝐧 𝐂𝐚𝐩𝐢𝐭𝐚𝐥® 𝐚𝐧𝐝 𝐢𝐭𝐬 𝐫𝐞𝐩𝐫𝐞𝐬𝐞𝐧𝐭𝐚𝐭𝐢𝐯𝐞𝐬 𝐦𝐚𝐲 𝐡𝐚𝐯𝐞 𝐩𝐨𝐬𝐢𝐭𝐢𝐨𝐧𝐬 𝐢𝐧 𝐭𝐡𝐞 𝐬𝐞𝐜𝐮𝐫𝐢𝐭𝐢𝐞𝐬 𝐝𝐢𝐬𝐜𝐮𝐬𝐬𝐞𝐝 𝐢𝐧 𝐭𝐡𝐢𝐬 𝐭𝐰𝐞𝐞𝐭.

𝐓𝐡𝐞 𝐢𝐧𝐟𝐨𝐫𝐦𝐚𝐭𝐢𝐨𝐧 𝐜𝐨𝐧𝐭𝐚𝐢𝐧𝐞𝐝 𝐢𝐧 𝐭𝐡𝐢𝐬 𝐭𝐰𝐞𝐞𝐭 𝐢𝐬 𝐢𝐧𝐭𝐞𝐧𝐝𝐞𝐝 𝐟𝐨𝐫 𝐢𝐧𝐟𝐨𝐫𝐦𝐚𝐭𝐢𝐨𝐧𝐚𝐥 𝐩𝐮𝐫𝐩𝐨𝐬𝐞𝐬 𝐨𝐧𝐥𝐲 𝐚𝐧𝐝 𝐬𝐡𝐨𝐮𝐥𝐝 𝐧𝐨𝐭 𝐛𝐞 𝐜𝐨𝐧𝐬𝐭𝐫𝐮𝐞𝐝 𝐚𝐬 𝐢𝐧𝐯𝐞𝐬𝐭𝐦𝐞𝐧𝐭 𝐚𝐝𝐯𝐢𝐜𝐞 𝐭𝐨 𝐦𝐞𝐞𝐭 𝐭𝐡𝐞 𝐬𝐩𝐞𝐜𝐢𝐟𝐢𝐜 𝐧𝐞𝐞𝐝𝐬 𝐨𝐟 𝐚𝐧𝐲 𝐢𝐧𝐝𝐢𝐯𝐢𝐝𝐮𝐚𝐥 𝐨𝐫 𝐬𝐢𝐭𝐮𝐚𝐭𝐢𝐨𝐧. 𝐏𝐚𝐬𝐭 𝐩𝐞𝐫𝐟𝐨𝐫𝐦𝐚𝐧𝐜𝐞 𝐢𝐬 𝐧𝐨 𝐠𝐮𝐚𝐫𝐚𝐧𝐭𝐞𝐞 𝐨𝐟 𝐟𝐮𝐭𝐮𝐫𝐞 𝐫𝐞𝐬𝐮𝐥𝐭𝐬.

𝐈𝐧𝐟𝐨𝐫𝐦𝐚𝐭𝐢𝐨𝐧 𝐜𝐨𝐧𝐭𝐚𝐢𝐧𝐞𝐝 𝐢𝐧 𝐭𝐡𝐢𝐬 𝐭𝐰𝐞𝐞𝐭 𝐡𝐚𝐬 𝐛𝐞𝐞𝐧 𝐨𝐛𝐭𝐚𝐢𝐧𝐞𝐝 𝐟𝐫𝐨𝐦 𝐬𝐨𝐮𝐫𝐜𝐞𝐬 𝐛𝐞𝐥𝐢𝐞𝐯𝐞𝐝 𝐭𝐨 𝐛𝐞 𝐫𝐞𝐥𝐢𝐚𝐛𝐥𝐞, 𝐛𝐮𝐭 𝐢𝐬 𝐧𝐨𝐭 𝐠𝐮𝐚𝐫𝐚𝐧𝐭𝐞𝐞𝐝 𝐚𝐬 𝐭𝐨 𝐜𝐨𝐦𝐩𝐥𝐞𝐭𝐞𝐧𝐞𝐬𝐬 𝐨𝐫 𝐚𝐜𝐜𝐮𝐫𝐚𝐜𝐲.
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⁠Quiver Quantitative
BREAKING: Representative Mike Collins just filed several new meme coin trades.

This includes more purchases of "Ski Mask Dog".

Full trade list up on Quiver. https://t.co/nYg2lz3bWI
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Nearly $6.5B in free cash flow.

Here's why the stock is dropping. 👇 $AVGO
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"We recognize that Elon benefits from the taxpayer dollars" https://t.co/IuiJfOzJec
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⁠Quiver Quantitative
Speaker Mike Johnson just said:

I don't tell Elon how to build rockets, and I wish he wouldn't argue with me about how to craft legislation
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⁠Quiver Quantitative
JUST IN: Representative Dave Min has introduced legislation to ban stock trading for senior Government officials.

Min sold all of his individual stock holdings upon entering office this year. https://t.co/V6LnWAZxVC
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JUST IN: Representative Clay Higgins has introduced legislation that would require members of Congress to participate in drug tests.

It's called the "Exposing Congressional Drug Abuse Act"
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⁠The All-In Podcast
👀🔥

congrats team @Polymarket !

we’re joining forces with Polymarket as our official prediction market partner

@X 🤝 @Polymarket - X
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JUST IN: Tulsi Gabbard has sold up to $250K of Tesla stock.

Before anyone gets any ideas: this sale was made last month as part of an ethics agreement.

She also sold her stake in Rumble, Bitcoin, Solana, Ethereum, and Cronos.

Track politicians' portfolios on Quiver. https://t.co/aw8Z9yCb3C
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⁠The All-In Podcast
Peter Thiel on the state of college education: "far worse than I even thought ... I do think a lot of the students got ripped off."

At last year's All-In Summit, Peter Thiel broke down the dire situation for recent cohorts of college grads and argued for loan forgiveness backed by the universities and their bond holders, not just the American taxpayer.

Thiel:

"I think the universities are far worse than I even thought when I started (the Thiel Fellowship)."

"The student debt was $300B in 2000. It's basically close to $2T at this point."

"And then if you look at it by cohort, if you graduated from college in 1997, 12 years later, people still had student debt, but most of the people had sort of paid it down."

"By 2009, the median person had more student debt 12 years later than they graduated with."

"I do think a lot of the students got ripped off."

"So I think there should be some kind of broad student debt forgiveness at this point."

J-Cal:

"Who should pick up the tab?"

Thiel:

"It's not just the taxpayers. It's the universities and it's the bond holders."

"If you just make it the taxpayers, then the universities can just charge more and more every year."

Friedberg:

"There's no incentive to change."

Thiel:

"There's no incentive to reform whatsoever."

Recorded on September 9th, 2024 at the All-In Summit
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