I would just like to say thank you for the work you put in! This was an extremely well-written and accessible analysis that left me with a lot of food for thought!
Wolf I think your FCF is overstated because it includes the add back of SBC. I think you have implied that you are accounting for that with a dilution assumption. Is that correct? If so, can you share how you've done do?
How do you think it compares to Booking Holdings? It seems to be trading much cheaper with a similar growth outlook, superior long-term strategy, and larger market share.
Do you think the terminal growth in FCF is understated in the analysis?
If you assume a terminal growth of 4% (2% from volume and 2% from pricing due to inflation) then shares trade at a 43% discount.
You could assume that unit growth in property listings/stays grows at the rate of real growth in GDP (probably 2% over the long term). This is because we will probably build a net 2% more properties each year over the long term and as people become more productive they will have more discretionary time and income to travel.
You could also assume that the revenue per listing grows at the long term inflation rate (also probably 2% in the long term). This is because hosts charge daily rates in nominal terms and since revenues are a function of the product of take rate and GBV then the price per listing should increase by 2% over the long term as well.
I would just like to say thank you for the work you put in! This was an extremely well-written and accessible analysis that left me with a lot of food for thought!
Wolf I think your FCF is overstated because it includes the add back of SBC. I think you have implied that you are accounting for that with a dilution assumption. Is that correct? If so, can you share how you've done do?
How do you think it compares to Booking Holdings? It seems to be trading much cheaper with a similar growth outlook, superior long-term strategy, and larger market share.
This was a fun read!
Do you think the terminal growth in FCF is understated in the analysis?
If you assume a terminal growth of 4% (2% from volume and 2% from pricing due to inflation) then shares trade at a 43% discount.
You could assume that unit growth in property listings/stays grows at the rate of real growth in GDP (probably 2% over the long term). This is because we will probably build a net 2% more properties each year over the long term and as people become more productive they will have more discretionary time and income to travel.
You could also assume that the revenue per listing grows at the long term inflation rate (also probably 2% in the long term). This is because hosts charge daily rates in nominal terms and since revenues are a function of the product of take rate and GBV then the price per listing should increase by 2% over the long term as well.