ABNB or BKNG

Assalamou Alaikoum,

Anybody looking at the travel companies like ABNB and BKNG ? any ideas ? i am inclining into betting into increasing my exposure to Booking as their financials is much stronger than Airbnb and this later’s cost of debt is quiet high…

let me know your thoughts

Don’t own either currently. BKNG has an excellent track record of sales and earnings growth, generated solid free cash flow. ABNB biz model is good as well. However, last i checked was not profitable.

Actually i did a quick comparison
BKNG
Market Cap $90B
Sales $9B (2021e) and $15B in 2019
Profit $1.4B in 2021 expected and $5B in 2019. Full recovery expected in 2023.
So about 18x 2023 earnings.

ABNB
Market Cap $85B
Sales $5.5B and $8.5B expected in 2023
Profit $350M expected in 2023

So there you have it.

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tks for the details, i just believe the earnings will pick up earlier than 2023.

will wait for Q2 results to decide on them.

tks again

I find companies that have caused a behavioral impact on the world to be interesting and that is why I’m long $ABNB. I view their business not just as a travel stock but rather as a brand that is set to transform how a new and flexible workforce lives, travels, and experiences the world. Also, despite the pandemic, Airbnb’s business proved highly resilient, with strength in domestic/nearby travel and long-term stays. When we’re all free to travel the world again, I believe another new phase of fast growth for Airbnb will commence.

Your expectation likely true about the growth for ABNB. I guess I am looking at what its already worth for what its likely to make even in the next 2 years and comparing with a high quality biz in the similar space (BKNG) and think that might be a bargain , when the travel resumes.

For similar market cap, you could earn $5B vs not even $1B for ABNB. As a business owner , I would chose the former. Again no position in either at the moment. Will be interesting to revisit this thread annually.

ABNB $139
BKNG $2200

PS. for newcomers, please do not compare stock prices to decide which one is ‘expensive’ or ‘cheap’.
You decide it based on earnings or cash flows (ideally future if not current) relative to market cap. Which is why i gave the 2023 expected net income for both and gave the market cap for both. You compare those.

When you see PE ratios , you have to do the math yourself to know which E is used by the analyst or website. They could be taking the current Earnings (E). Some take one year out. In the case of ABNB , they do not report any current GAAP earnings, hence i had to look at 2023 estimates to make a comparison. Now, the 2023 is an estimate so take all of that with a bag of salt or pepper , depending on your choice of condiment :slight_smile:

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Tks Guys for the interactions,

I am actually inclined to Adib’s view on Booking versus ABNB. To me, it seems that Booking is more suited to face the actual pandemic with strong financial and ongoing growth. ABNB seems to be much weaker and still on the negative side profitability wise.

In addition : ABNB has got full blast in debt cost of debt for ABNB is pretty high in 2020 at 7% which is telling me something is weird there …

to conclude, comparing Market Caps, i would much more get into Booking side versus ABNB mainly due to the financials, plus i believe ABNB will need much more time to turn positive in its business model, which might pose an issue if they keep on increasing debt …

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I just checked the balance sheet as of March end 201 for ABNB. I dont see any concerns .

Cash is $6.5B
LT Debt is $2B

So they are net cash.

ABNB is an asset light business as they do not own any property for lodging. Similar to BKNG in a way.

Btw, You should look at the Cash Flow Statement in addition to the Income Statement.
ABNB generated $400M in free cash flow ( Cash from Ops - Capital Expenditure). That is a true measure of profitability vs net income in many industries.

So its not all doom and gloom at ABNB on either balance sheet or cash flows. Its just that they earn quite less relative to the market cap (currently) and BKNG earns quite a bit more.