TIP856: Airbnb (ABNB): The Business Outgrew Its Peak, The Stock Hasn't w/ Kyle Grieve & Shawn O'Malley

Airbnb

Across the shows: 1 speaker in other episodes, 1 bullish and 0 bearish calls, past 30 days

• Kyle Grieve · The Investor's Podcast NetworkBullish

  Airbnb's growth slowdown was a temporary spending blip; growth is reaccelerating and can last for years.

  Kyle says revenue compounded about 90% and operating cash flow about 39% since the IPO, then growth slowed. After looking under the hood, he judged the slowdown a temporary blip in spending to support future growth. He says growth rates are now speeding back up, above historical averages, and that new services and geographies are adding market share, so Airbnb may keep growing well for many years.

  “the slowdown looks more like a temporary blip in spending just to support that future growth. And even now, we're seeing growth rates speeding back up and even past their historical averages.”at 0:37

• Shawn O'Malley · The Investor's Podcast NetworkBullish

  Airbnb has a long runway as travel grows and alternative stays take share from hotels.

  Shawn points to the World Cup, which brought 150,000 new homes onto Airbnb, with hosts earning hundreds of millions and guests from 196 countries across 16 host cities. He argues that anywhere other than a traditional hotel is taking a growing share of bookings from hotels, and that he uses Airbnb for nearly all discretionary travel because of pet-friendliness, shared family space and community feel. He sees a long growth runway as the world travels more.

  “So I continue to see Airbnb as having a long runway ahead of it as the world travels more and more and as alternative accommodations.”at 3:47

• Shawn O'Malley · The Investor's Podcast NetworkBullish

  About 90% of Airbnb's traffic is direct or unpaid, unlike Booking's multibillion-dollar ad spend.

  Shawn says that during COVID Airbnb shut off most performance marketing to save cash, and it still retained roughly 90% of total traffic, which comes directly or through unpaid channels. He contrasts this with Booking.com, which reportedly spends about $5 to $7 billion a year on advertising, mostly Google clicks. Because Airbnb spends a much smaller share of revenue to acquire customers, he calls this a major competitive advantage.

  “they actually still had roughly 90% of their total traffic return. So they still get about 90% of current customers coming directly from their platform or through unpaid channels.”at 11:55

• Kyle Grieve · The Investor's Podcast NetworkBullish

  Airbnb's brand and app need far less marketing spend than Booking and Expedia, a true competitive edge.

  Kyle says Airbnb spent about one fifth of revenue on marketing in 2025, versus about a third at Booking.com and about half at Expedia. He argues the brand and a superior app let Airbnb acquire customers more cheaply and redirect money into product improvements. He calls the ads and product a real competitive advantage, saying Airbnb's app looks far better than competitors'.

  “So in 2025, they just spend about one fifth of their revenue on marketing expenses, which is obviously very, very low compared to... a third for booking.com and about half for Expedia.”at 12:33

• Kyle Grieve · The Investor's Podcast NetworkBullish

  Gross booking value is a clear win: it compounded 34% since Q4 2024, nailing the growth assumption.

  Kyle cites gross booking volume compounding at 34% since the last quarter of 2024, which validates Shawn's original assumption of low double-digit growth. He notes that gross booking volume grew 16% in the first half of 2026, somewhat closer to Airbnb's historical growth rate in that metric.

  “Airbnb has done very very well on your first assumption, know, gross booking volume since the last quarter of twenty twenty four has compounded 34%. So you just nailed that assumption.”at 18:22

• Shawn O'Malley · The Investor's Podcast NetworkBullish

  Sponsored listings are low-hanging fruit that could become a big Airbnb business, though timing is slower.

  Shawn argues that sponsored listings seemed like low-hanging fruit, similar to Amazon or Google sponsored results, letting hosts bid on keywords for top placement. He admits he may have been wrong to expect them sooner, since management has not discussed them recently. He still believes ads could become a big business down the road, and that the investment never depended on their timing.

  “While I felt it seemed like pretty low hanging fruit to just go after sponsored listings, perhaps I was wrong in assuming that we would see them sooner than has happened in reality.”at 26:23

• Kyle Grieve · The Investor's Podcast NetworkNeutral

  Take rate has slipped from 13.6%; without sponsored listings it may stagnate, though the thesis is not broken.

  Kyle notes the take rate has dropped a little from about 13.6% in 2024 and is around 13.2% in the latest quarter. He says the original thesis expected the take rate to rise via sponsored listings, which have not arrived. Without that ad revenue, he expects more stagnation in the take rate, which changes the risk profile somewhat. He stresses that other growing parts of the business mean the thesis is not broken.

  “if they can't rely on getting some of that extra revenue from these sponsor listings to help increase their take rate, you know, we're just maybe going to see a little more stagnation”at 27:27

• Kyle Grieve · The Investor's Podcast NetworkBearish

  AI booking agents ignore sponsored placements, which weakens Airbnb's future ad-driven take-rate lever.

  Kyle cites a VRBO article about sponsored listings and argues that AI agents undermine their value. An AI agent choosing a Manhattan stay would assess ratings, reviews, price and amenities and would not care whether a listing is sponsored. As AI agents spread, the sponsored listings lever that could lift Airbnb's take rate would be weaker.

  “part of the weakness of the sponsor listings kind of stems from the role that AI agents will play in finding places to book. For instance, if I were to use an AI agent”at 28:39

• Shawn O'Malley · The Investor's Podcast NetworkBullish

  Agentic shopping remains unproven, so Airbnb can raise take rate without being overly disrupted by AI.

  Shawn concedes sponsored listings will weaken to some extent if AI agents are used at scale, and that Meta's Muse agent has gone viral with consumers. But he argues that running everything through an agent, especially shopping, remains unproven despite the hype. He suggests Airbnb may find a way to improve its take rate without being overly disrupted by AI, and he is comfortable with management taking its time.

  “the idea of running everything through an agent, especially shopping decisions, I think really remains an unproven concept despite the hype around it.”at 29:01

• Shawn O'Malley · The Investor's Podcast NetworkBullish

  Airbnb's insurance business, growing 60% a year in 12 countries, could scale and help margins.

  Shawn notes that Airbnb's insurance business is offered in only 12 countries yet grows revenue 60% year over year. He admits it is still a small revenue producer that does not move the needle much. He thinks it could be scaled up and would further help margins, which he finds promising.

  “their insurance business is only offered in 12 countries, but it's growing revenue by 60% year over year. So even if that doesn't move the needle a ton, it does seem like something that could very much be scaled up”at 29:49

• Kyle Grieve · The Investor's Podcast NetworkUncertain

  Margin expansion is hard to see: gross profit margin flat since 2022 and the cash share of revenue is slipping.

  Kyle says the margin profile has clearly improved over a long look-back, but since 2022 gross profit margin has not really moved. The share of revenue Airbnb keeps as cash has also slipped somewhat. He finds it hard to judge margin progress, so he is uncertain whether the expected margin expansion is happening.

  “it's kind of hard to tell, you know, the margin profile has clearly improved if you look back far enough, but since 2022 gross profit margin hasn't really moved while the share of revenue they keep as cash has kind of slipped a little bit.”at 30:08

• Shawn O'Malley · The Investor's Podcast NetworkBullish

  Airbnb's 10% nights-and-seats growth versus Booking's 4% alternative-stay growth shows Airbnb taking share.

  Booking Holdings now has about 9.1 million alternative accommodation listings, all competing with Airbnb, and Booking's latest investor deck showed 4% growth in that segment. Airbnb grew nights and seats booked 10% year over year. Shawn argues this gap means Airbnb is still taking market share from Booking, even though Booking is not dead.

  “When you compare that with Airbnb's growth of 10% year over year in nights and seats booked, it does appear that Airbnb is is still taking market share from them.”at 31:03

• Kyle Grieve · The Investor's Podcast NetworkBullish

  Record bedroom nights show rising demand for larger houses; group travel is a defensible edge over hotels.

  Kyle highlights record bedroom nights, which multiply nights booked by bedroom count and are growing faster than nights and seats booked. He reads this as customers using larger and larger houses more often. Drawing on his Oregon trip with extended family, he argues a whole house with one kitchen beats multiple hotel rooms for group travel. He says this part of the original thesis is still very defensible, and that Booking and Expedia excel mainly at hotels.

  “the record number of bedroom nights that have been booked over the last year. So bedroom nights multiply nights booked by bedroom count, and this is growing faster than just the nights and seats booked.”at 31:56

• Shawn O'Malley · The Investor's Podcast NetworkBullish

  Verified identities, reviews and host messaging make Airbnb's trust hard for AI chatbots to replicate.

  Shawn argues trust is becoming more important as AI chatbots spread. Chesky said a chatbot does not have Airbnb's 200 million verified identities or 500 million proprietary reviews, and cannot message the host, which 90% of guests do. Shawn adds that about 70% of listings are exclusive to Airbnb, and most hosts default to the platform where their guests are. Airbnb took nearly two decades to build this, which is why he is comfortable letting his family stay in strangers' homes.

  “The other advantage I'd mentioned too is trust, which I think is becoming increasingly important with this growing world of AI chatbots, right?”at 32:53

• Kyle Grieve · The Investor's Podcast NetworkBullish

  Human connection and accumulated reviews make Airbnb hard for AI chatbots or rivals to disintermediate.

  Kyle recounts a conference attendee whose Booking.com hotel change failed because the AI chatbot could not reach a human. He argues person-to-person connection matters a lot for trip quality, making Airbnb's human connection an underrated part of its model. He describes Airbnb's reviews and verified identities as an accumulated asset that grows with every booked night, so no competitor could buy its roughly 500 million reviews with billions of dollars.

  “So I think that whole part about the AI chatbot is really, really interesting, and it matters a lot. Having that kind of person to person connection is really, really important.”at 33:57

• Kyle Grieve · The Investor's Podcast NetworkUncertain

  Airbnb's pro-host moat is a soft spot: price-sensitive operators could switch platforms cheaply if fees rise.

  Kyle plays devil's advocate on the competitive moat. Multi-platform hosts running property management software are the most price-sensitive and have the nicest, most consistent listings. Airbnb's move to a 15.5% fixed fee may partly reflect a wish to keep these operators happy. If Airbnb got greedy, these operators could shift to Vrbo or Booking.com with almost no switching cost beyond losing one listing. He presents this as a real weakness that got him thinking, not a settled conclusion. He later accepts Shawn's counterpoint that guest demand is what keeps pros on the platform.

  “So if Airbnb were ever to get greedy, those operators could easily shift their businesses to something like Vrbo or [Booking] without really incurring any real switching cost penalty”at 36:11

• Shawn O'Malley · The Investor's Podcast NetworkBullish

  Airbnb's guest loyalty and app-booking share make its moat stronger over time, even versus pro hosts.

  Shawn argues the real moat is guest loyalty, not host supply. Professional property managers can delist from Airbnb at any time, but they cannot take Airbnb's guests with them. Hosts multi-list to whichever platform fills their calendar, so guest demand is what keeps them on Airbnb. The evidence is Q2 data: 64% of nights were booked through the Airbnb app, up from 59% a year earlier. App nights grew 23% year over year against 10% growth in total nights and seats booked, so app bookings are growing about twice as fast as the business. Users who open the app to plan a trip are not comparison shopping, so pros have little reason to leave even if they list elsewhere too.

  “What keeps them on Airbnb isn't the supply side, but it's the robustness of the demand. And a property manager can pull their listings off of Airbnb tomorrow, but they can't take Airbnb's guests with them.”at 38:15

• Kyle Grieve · The Investor's Podcast NetworkBullish

  Airbnb's margin squeeze from higher spending is acceptable, with attractive returns on the investment.

  Kyle notes revenue has grown more than twice as fast as cash from operations since 2024. Spending on sales and marketing and product development, including new hires, has grown faster than revenue, which compresses margins. Management warned in early 2025 that adjusted EBITDA margins would be lower to fund the next leg of growth. He also points out that the float balance rose from about $7 billion at the end of 2025 to over $12 billion by Q2, which he credits as good management. He sees the reinvestment as a deliberate choice with attractive returns, so he has no concern about the spending and expects continued growth from it.

  “Well as for the increased spending, I'm really glad to see them investing back into the product and customer acquisitions. So really no concerns for me on that front.”at 39:39

• Shawn O'Malley · The Investor's Podcast NetworkBullish

  Airbnb's buy-now-pay-later feature costs some float and timing, but its net benefit will show over time.

  Airbnb's 'reserve now, pay later' feature launched in mid-2025 and went international in early 2026. It has real cash-flow costs: fewer guests pay upfront, so less float is held and earns interest, which helps explain falling interest income even as rates rose. Unearned fees jumped about 60% this year, but that is seasonal. On a June-to-June basis they were flat even though bookings grew 18%. The gap reflects the feature at work: bookings count before cash arrives. Shawn sees it as a strong customer feature. If it drives more bookings because people feel comfortable booking further ahead, the trade nets out or slightly favors Airbnb.

  “But it is really just a great feature from a customer perspective and so I think the net benefit will be clear over time.”at 41:51

• Kyle Grieve · The Investor's Podcast NetworkUncertain

  Airbnb's pay-later feature trades cash timing and cancellation certainty for more bookings; a reasonable trade if cancellations stay manageable.

  Kyle sees the pay-later feature as a trade-off. Airbnb recognizes revenue at check-in regardless of payment timing, and management says the feature encourages earlier booking and lifts average nightly rates. The catch is that guests who have not paid are more likely to cancel, which makes bookings a less reliable preview of future revenue. Airbnb gives up some cash timing and certainty in exchange for more bookings. Kyle thinks the trade is reasonable as long as cancellations stay manageable. He says he will watch this metric closely over the next few quarters and years.

  “So as long as the cancellations stay manageable, I still think it's a reasonable trade, but it's definitely a number that I'll be watching more closely over the next few quarters and years.”at 44:23

• Shawn O'Malley · The Investor's Podcast NetworkBullish

  Airbnb's free cash flow margin shows a highly profitable, capital-light model; ROIC and ROE mislead here.

  Shawn argues ROIC is meaningless for Airbnb. Customers fund the business, the hosts own the homes, and most guests pay before travel, so invested capital is near zero or negative and the ratio says little. He prefers free cash flow and operating margins. Airbnb turned 38% of its revenue into free cash flow last year with little capital needed to grow. ROE of about 35% is also distorted: buybacks have shrunk equity from about $8.2 billion at year-end to $7.8 billion by June, which lifts ROE even if the business does not improve.

  “Airbnb turned 38% of its revenue into free cash flow last year, which is very, very good without needing really much capital at all to grow.”at 46:55

• Kyle Grieve · The Investor's Podcast NetworkBearish

  Stock-based compensation will keep rising as Airbnb competes for talent against hyperscalers.

  Kyle sees stock-based compensation as a lasting cost, which he calls the 'tech tax.' Airbnb competes for scarce software engineers with hyperscalers such as Alphabet and Microsoft, which are always hunting for top talent and willing to pay for it. Economies of scale don't remove the cost. As Airbnb keeps growing, he expects it to keep adding talent, so SBC is more likely to rise over the next few years than fall. He acknowledges SBC growth has leveled off, rising about 13% from 2024 to 2025, but still expects it to remain a drag.

  “So with Airbnb, you know, I guess you could call it the tech tax. That's something that I just don't really see going away anytime soon.”at 48:44

• Shawn O'Malley · The Investor's Podcast NetworkBullish

  Operating leverage is starting at Airbnb, with stock comp growing slower than revenue and drifting toward 11%.

  Shawn says stock-based comp grew faster than revenue for three straight years, rising from about 11% of revenue in 2022. Management said the 2025 increase came from faster headcount growth. 2026 is the first year the dynamic has flipped: in the first half, revenue grew 17% while SBC grew about 15%. Management says SBC and headcount growth will slow this year. Shawn expects the SBC dollar figure to keep rising over five years, but as a share of revenue it should drift lower, maybe back toward 11%. This assumes revenue keeps growing at double-digit rates and AI helps keep headcount flatter.

  “But 2026 is the first year where that dynamic has flipped. So in the first half, revenue grew 17% while stock based comp grew about 15%.”at 53:00

• Shawn O'Malley · The Investor's Podcast NetworkBullish

  Airbnb's buybacks mostly offset dilution, yet share count should keep shrinking a few percent a year.

  Diluted shares fell about 5% in the last year, but much of that is buybacks mopping up stock-comp dilution. Last year Airbnb spent $3.8 billion on buybacks against $1.6 billion of total stock-based comp, so roughly 40% of the buyback budget only offset dilution before shareholders saw any net benefit. Shawn expects SBC dollars to keep rising. With $4 to $5 billion of annual free cash flow going largely to buybacks, he expects the share count to keep shrinking a few percent a year. The net per-share benefit is smaller than headline buybacks suggest.

  “And with 4 to $5,000,000,000 annual free cash flow going largely to buybacks, I'd expect share count to keep shrinking by a few percent a year.”at 54:12

• Kyle Grieve · The Investor's Podcast NetworkBullish

  Airbnb's debt risk is very low, with interest covered more than 90 times by profits.

  Kyle notes long-term debt was zero at the end of 2025 and is about $2.5 billion now, with no short-term debt. Maturities run out to 2036. Airbnb has a large cash balance. Shawn explains that the debt funds buybacks and extends maturities, and that profits cover interest more than 90 times over. Kyle concludes the risk of Airbnb getting into debt trouble is incredibly low. He also doesn't think the business is at risk of going out of business.

  “So the risk of them getting into trouble with their debt is incredibly low at this point.”at 56:04

• Shawn O'Malley · The Investor's Podcast NetworkBullish

  Chesky's hands-on founder mode is lifting efficiency: flat headcount, doubled revenue, faster product launches.

  Shawn describes Chesky going back into product details after the pandemic, against conventional management advice. Airbnb ended 2025 with about 8,200 employees, roughly the pre-pandemic level, while revenue has more than doubled. Shawn credits Chesky's hands-on approach at a key inflection point for helping shareholders. Management says it is cutting the time from idea to launch on key projects by up to 60% while launching nearly 80% more features than the prior year. Kyle agrees that founder mode suits highly efficient businesses like Airbnb.

  “And then even this year, management says they're still improving efficiency by cutting the time from idea to launch on key projects by up to 60%, all while launching nearly 80% more features than the previous year.”at 58:28

• Shawn O'Malley · The Investor's Podcast NetworkBullish

  Airbnb's founder-led management and insider ownership make governance strong and aligned with shareholders.

  Shawn sees Airbnb's governance as strong. Chesky and his two co-founders own over a quarter of the shares economically and hold over 80% of the voting rights. Chesky takes a $1 salary, and his large option award only pays out if the stock rises sharply, with market-cap hurdles measured on 60-day averages and delayed vesting. The board simplified the executive bonus for 2026 to revenue growth and adjusted EBITDA margins. Shawn's one quibble is that adjusted EBITDA excludes stock comp, and he would like free cash flow per share included. He concludes none of this worries him as a shareholder.

  “So overall, the corporate governance is pretty good. And as a shareholder, I mean, none of this is keeping me up at night whatsoever.”at 1:06:08

• Kyle Grieve · The Investor's Podcast NetworkUncertain

  AI assistants could become travelers' starting point, threatening Airbnb's direct-traffic advantage over time.

  Kyle does not think an AI agent will replace Airbnb, since it sells an experience AI cannot replace. The real exposure is customer flow. Booking.com pays Google for traffic because Google owns the trip's starting point. Airbnb has avoided that tax because people type a location plus 'Airbnb' into search. Kyle argues the next generation of travelers, such as a son at 20, may ask an AI assistant where to stay, and an agent could own the starting point instead of Google or Airbnb. He says this is uncertain and not known, though Airbnb owns the starting point better than most competitors.

  “I don't think it's inconceivable to think maybe my son, for instance, when he's 20 years old and wants to go traveling with some friends, maybe he'll just ask [ChatGPT] or Claude where to stay and then have an AI agent that looks at the starting point, not Google and not Airbnb.”at 1:07:22

• Shawn O'Malley · The Investor's Podcast NetworkUncertain

  AI assistants could force Airbnb to pay for customers, weakening its cheap customer acquisition advantage.

  Shawn sees a real risk from agentic search. Airbnb has historically acquired customers far more cheaply than competitors. If it had to pay OpenAI or Claude to send customers to it, and its supply and inventory were partly commoditized by agentic search, that would significantly weaken its position. He offsets this with evidence: about two-thirds of nights are now booked in the Airbnb app, and that share is still rising. The more bookings flow through the app, the less Airbnb relies on outside channels. He treats this as a risk the company is currently managing well.

  “The AI angle probably poses a risk to Airbnb's ability to acquire customers at a much lower price than competitors, which has been an advantage for them previously.”at 1:07:51

• Shawn O'Malley · The Investor's Podcast NetworkBullish

  Airbnb's AI customer-service agent already resolves 45% of issues, improving experience and cutting costs.

  Shawn argues AI has been a tailwind for Airbnb so far. The company now has AI resolving 45% of customer service issues with no human involved. He sees this as improving the customer experience and possibly saving on costs. He also wants AI to raise productivity so the company can get more from its workforce without hiring, for example by automating much of customer service. He cautions that over-eager adoption could do more harm than good, since customer service is sensitive.

  “it's actually been somewhat of a tailwind for Airbnb in some ways as they now have AI resolving 45% of customer service issues without any human needing to be involved.”at 1:08:13

• Shawn O'Malley · The Investor's Podcast NetworkNeutral

  Short-term rental rules are real but local headwinds, not a chronic threat to Airbnb's overall business.

  Shawn says regulation is a real risk, but it comes as a series of local headwinds rather than a threat to the whole business. New York is the best test case. The city's bans were estimated to bring about $85 million a year to Airbnb, barely 1% of revenue at the time. Short-term listings there fell more than 80% in the first year of regulation. Yet the impact was hard to see in Airbnb's overall results. Kyle adds that EU short-term rental rules and Barcelona's planned residential ban are further local pressures, but not a gigantic headwind.

  “regulation is a real risk sort of acutely because it's more of a series of local headwinds than a chronic threat to the whole business.”at 1:10:15

• Shawn O'Malley · The Investor's Podcast NetworkUncertain

  City-level short-term rental bans are manageable for Airbnb, but national bans like Spain's would be the real risk.

  Shawn argues city-level crackdowns hit little of Airbnb because it has over 9 million listings across 220+ countries, and most supply sits in beach towns, mountain cabins and smaller cities that want tourism. Dense cities like New York, Barcelona and Amsterdam are where backlash concentrates, and the NYC ban cut listings by over 80% in its first year, yet barely showed in overall results. He says the one to watch is a spread from city bans to entire countries, with Spain ordering about 65,000 listings pulled last year. The EU registration and data-sharing rules that took effect in May mostly force registration and data sharing, which he calls not terrible for Airbnb long term, but they give governments an easier tool to enforce stricter limits.

  “which is not a terrible thing for Airbnb long term. ... But they also give governments a much easier tool to enforce stricter limits generally.”at 1:11:56

• Shawn O'Malley · The Investor's Podcast NetworkBearish

  Travel is cyclical; in a recession Airbnb faces falling nights and nightly rates from fixed-cost deleveraging.

  Shawn says travel will always be cyclical. In a recession people take fewer trips, operate on tighter budgets, and choose cheaper options if they travel for leisure. That hits Airbnb twice: nights booked fall, and the nightly price per booking also falls as demand weakens. Airbnb has large fixed costs like engineers and marketing, so the margin expansion that came with revenue growth reverses sharply when revenue declines, which he calls deleveraging.

  “So until that comes in a recession, the reality is that people are more likely to take fewer trips and they're operating on tighter budgets, of course.”at 1:12:58

• Kyle Grieve · The Investor's Podcast NetworkBullish

  Airbnb's large cash generation and balance sheet let it weather a downturn better than rivals.

  Kyle agrees the operating leverage risk exists, but argues it hits all competitors, not just Airbnb. Airbnb has a strong balance sheet and generates billions of dollars in cash per year, so it is well set up to get through a downturn. He adds that Airbnb spends much less on advertising than some competitors, which makes it more resilient.

  “I think luckily for Airbnb, it's a risk that's not just focused just on Airbnb... since they have this really nice balance sheet and since they're generating, you know, billions of dollars in cash per year, I think they're pretty well set up to at least weather those kinds of storms if they eventually hit.”at 1:13:50

• Kyle Grieve · The Investor's Podcast NetworkBullish

  India's rising incomes could make it a multi-decade travel tailwind for Airbnb.

  Kyle points to India's population of nearly 1.5 billion and to demographic change. GDP per capita growth has been explosive since the early 2000s, so more Indians have disposable income to travel. Even a small share of them starting to use Airbnb would be a large tailwind for multiple decades. He notes Airbnb needs no new product for this: it is the same app and model, with only marketing nuances changed.

  “And if even a small number of them begin using Airbnb in India, well, that's a market that could provide a massive tailwind for honestly multiple decades.”at 1:16:10

• Shawn O'Malley · The Investor's Podcast NetworkBullish

  Airbnb's expansion markets are growing twice as fast as core markets, a multi-year growth lever.

  Shawn cites strong growth in newer markets: Brazil up over 30% year over year with first-time bookers up 40%, Japan up high teens, and India accelerating to 60%. Airbnb reports these numbers by guest origin, so India's 60% growth reflects Indians booking more trips at home or abroad, which means new customers rather than just new listings. Wins come from small local tweaks such as interest-free installments in Brazil and Mexico and country-by-country marketing. Expansion markets grow about twice as fast as the core markets, which hold most of the business, but they are off a much smaller base, so it will take years before they move the overall growth rate. Shawn also sees Latin America up about 20% and Asia Pacific in the high teens, with North America and Europe also improving.

  “the majority of Airbnb's business is so concentrated in those five core markets and the expansion markets are growing twice as fast. But of course, that's off a much smaller base, so it'll take them years to catch up before they really move the overall growth rate in a big way.”at 1:17:35

• Shawn O'Malley · The Investor's Podcast NetworkBullish

  Airbnb's hotel bookings work as a customer-acquisition funnel into home bookings.

  Hotel nights are still a single-digit share of Airbnb's total nights, but they grow three times as fast as home bookings. Airbnb offers hotel stays with a price-match guarantee and credits for future bookings, which builds trust with guests who would not otherwise try Airbnb. Shawn cites that 35% of first-time hotel guests go on to buy a home stay within a year. He sees hotels as a customer-acquisition channel rather than a major growth driver in themselves.

  “while the hotel growth isn't as impressive as growth in the international markets, I do think it's really functioning as a customer acquisition channel that can be funneled throughout the company.”at 1:19:18

• Kyle Grieve · The Investor's Podcast NetworkBullish

  Airbnb's new-customer push is working, with first-time bookers growing at a four-year high.

  Kyle says hotels give Airbnb a clever way to use empty hotel inventory while pulling in new customers who then build brand awareness for the core home product. First-time bookers grew 11%, the fastest rate in four years, which he takes as a strong sign the acquisition strategy works. He argues the product is good enough that once a customer is in the Airbnb ecosystem it is hard to leave for competitors or even a Google search.

  “So because first time bookers grew by 11%, the fastest growth rate that Airbnb has had in the last four years, I think it's a really strong signal that what Airbnb is doing around just finding these new customers is working really really well.”at 1:19:51

• Shawn O'Malley · The Investor's Podcast NetworkBullish

  Airbnb's experiences business shows encouraging early signs, but it is small and long-term.

  Shawn is excited about Airbnb layering experiences and services into trips, which it relaunched last year. Experience supply grew nearly 80% over the last year, and seat bookings are accelerating both year over year and quarter over quarter. Almost half of experience bookings at the end of last year were not attached to a stay, so people come to Airbnb just to book an experience, which he sees as another acquisition channel. Airbnb has not disclosed hard booking numbers, so he treats the business as still very small relative to homes. He also says Airbnb set aside $200 to $250 million last year for these new businesses and that Chesky calls it a multi-year effort rolled out one city at a time, so he expects it to be a long-term option rather than something that moves numbers in the next 12 to 18 months.

  “Airbnb's ability to layer in experiences and services into trips has been and still is one of the things I'm most excited about... I think the early signs are very encouraging.”at 1:20:31

• Shawn O'Malley · The Investor's Podcast NetworkBearish

  Airbnb's margin expansion is lagging: operating margin fell to about 21%, and take rate has stayed flat near 13%.

  Shawn's biggest negative surprise is that faster growth has not yet flowed through to margins, which makes sense because management is reinvesting to drive growth. Operating margin slipped from 23% in 2024 to about 21% last year, and stock-based compensation kept climbing, though the last couple of quarters were better. Take rate held around 13% rather than rising as he assumed, after Airbnb changed how it applies fees. Margin expansion is taking longer than he expected.

  “the biggest negative surprise though is that the faster growth has not fully flowed through to margins yet, which makes sense because they're investing to drive that growth.”at 1:23:53

• Shawn O'Malley · The Investor's Podcast NetworkBullish

  Airbnb's revenue growth has reaccelerated, with management guiding to at least mid-teens for the year.

  Revenue grew 10% last year, and then grew in the high-teens range in the first two quarters of this year. Management now expects at least mid-teens growth for the full year. Shawn says the reacceleration is the biggest positive surprise, driven by app improvements, first-time bookers, international markets and hotels. He thinks the business is in better shape than when he first pitched it.

  “management now expects at least mid teens growth for the full year, which is really great.”at 1:24:01

• Shawn O'Malley · The Investor's Podcast NetworkBullish

  Sponsored listings are Airbnb's missing revenue piece; waiting for an AI-era ad format is the right call.

  Shawn says sponsored listings are still the missing piece of Airbnb's model. Chesky has called ads a fairly easy path to $1 billion of incremental high-margin revenue. Chesky has chosen to get AI right first and design an ad format around it, and Shawn thinks that is the right call even though it delays the ads business, because search is changing quickly. He would rather Airbnb build ads for how people find information in two or three years than build around traditional search. Ads are therefore a long-term option that is slower than he hoped.

  “I still think the missing piece here is sponsored listings. So Chesky has called ads a pretty easy path to $1,000,000,000 in incremental high margin revenue for them.”at 1:24:48

• Shawn O'Malley · The Investor's Podcast NetworkNeutral

  Airbnb's share price has caught up to his roughly $150 intrinsic value estimate, so the stock looks fully valued.

  Shawn's original model put intrinsic value at about $150 a share, using enterprise value to EBIT with an exit multiple in the low-to-mid twenties. The stock now trades in the mid-to-high $150s, so it has caught up to his estimate over a little over a year. Updating the model for a flat take rate and slower margin expansion, offset by faster growth, leaves his intrinsic value estimate not dramatically changed.

  “And with the stock trading in the mid to high [150]s today, it caught up to that estimate and it took about, you know, a little over a year to do so.”at 1:25:48

• Kyle Grieve · The Investor's Podcast NetworkBullish

  Airbnb's shrinking share count and buybacks below intrinsic value should lift long-term per-share value.

  Kyle pushes back on Shawn's model, which assumed the share count stays flat with stock-based compensation offset by repurchases. The diluted share count has shrunk by nearly 3% a year since 2022. If Airbnb keeps buying back shares below intrinsic value, long-term value per share should be somewhat higher than Shawn's model assumes. He says the original model has aged well and that its conservatism shows in this assumption.

  “it's actually shrunk by nearly 3% a year, and if they can continue buying back shares at prices that are below intrinsic value, then chances are the long term value per share is actually going to be maybe a little bit higher.”at 1:26:50

• Kyle Grieve · The Investor's Podcast NetworkBullish

  AI agents will not dent Airbnb, since he loves the product as a consumer and won't switch.

  Kyle is a satisfied shareholder who keeps faith in Chesky and loves the product as a consumer. He does not see AI agents changing that, so he sees no reason to sell long term. The argument rests on his own experience as a user rather than on evidence about how agents would route bookings.

  “I continue to absolutely love the product as a consumer and I don't see that changing because of AI agents or anything like that.”at 1:27:33