Airbnb reported earnings after the market closed on Tuesday and the Market's reaction was not positive at all shares were down as much as 15% as I'm recording Shares are down 133% for the day market cap is down to $72 billion that's even with about $10 billion on the balance sheet I want to get to the results the trends that we see from Airbnb I don't think things are nearly as bad as the market thinks right now and if you take a long-term picture of Airbnb you look at their balance sheet you look at their free cash flow this is a phenomenally run company the question is just how much is it going to grow in the future and that was what was disappointing was guidance for Q3 2024 a little bit softer than even management had expected previously but this is still a growing company and it's still a company that's platform is getting more profitable so I want to get into those numbers and I'll compare it to a couple of other competitors my name is Travis ham thanks for watching asymmetric investing Please Please Subscribe here on YouTube for all my content and thanks to this video sponsor the monly fool if you go to fool.com ym they'll give you their top 10 stocks to buy right now so let's get right to the results you can see this is the Market's reaction as I'm recording midday on Wednesday $72 billion market cap I'm going to come back to that because I think that's important right now is what we're paying for Airbnb but these are the Q2 2024 numbers Revenue was up 11% from a year ago net income was $55 million a 20% net income margin that's a phenomenal margin they've got they've gotten to the point where they have really really good operating leverage in the business and this is one of the things that I think airb be really learned during the pandemic when they had to get really lean in 2020 kind of before that became a popular thing they really did it and they've be they've maintained that lean position able to grow on this digital platform that they built so that's this margin has maintained at a really high level and the free cash flow margin as well adjusted IA was a 33% margin that was up 9% year-over-year free cash flow kind of volle and I'll get to some of the reasons for that some of that has to do with the deposits that Airbnb is holding but that was 41% free cash flow margin over the last 12 months that is a phenomenal margin the free cash flow was up 16% year-over-year but take those with a bit of a grain of salt the better metric is going to be gross booking value 21.2 billion that's going to be the booking overall that's not actually going to be airbnb's Revenue Airbnb is only going to generate revenue on what it actually generates in fees so it's going to so if you spend $100 a night and Airbnb has a $20 fee $80 goes to the property owner Airbnb only generates $20 in revenue from that transaction but they're going to have $100 in Gross booking value Knights booked was also up 9% to$ 1251 million here's what's getting all the attention today is this Outlook section for Q3 2024 we expect to deliver revenue of 3.67 to$ 3.73 billion representing year-over-year growth of 8 to 10% so if you just look at their growth rate since coming out of the pandemic it's a steady decline how should we interpret that that is really the fundamental question that investors are asking right now I think what we need to do is we need to zoom back and say is Airbnb growing overall that pandemic period was a really weird period because bookings sales travel everything dropped Like a Rock then we got back to traveling again and probably ere extended towards travel so we're people were spending more on hotel rooms and airbnbs they were spending more on plane tickets we're now pulling back a little bit the consumers a little bit weaker that's exactly what Airbnb is saying with their guidance but that's also something we're seeing everywhere else I just pulled a couple of these for comparison this is bookings this is booking Holdings numbers and this is the comparison that I want to use here is the year-over-year revenue growth Q2 2022 56.3% that has dropped consistently now 7.1% and this is just room Knight sold so this is what's going to be comparable to Airbnb but you can see that this 7.1% still lower than airbnb's growth rate this quarter their expectations next quarter or their bookings so it seems like Airbnb is still doing really well compared to the competition what are things like at Hilton Hilton's a little bit different because they have a franchise model but the revar number is the one that I wanted to look at reped Power was up 32% versus Q2 2023 so so they're taking a little bit of price but if you look at their owned and leased hotels their revenue in that segment was down slightly for the quarter so this weakness in the consumer is something we're seeing across the board this is not Airbnb specific and that's really what I think we need to keep in mind thanks to our friends at the mle fool for sponsoring this video visit fool.com ym for the top 10 stocks to buy right now here's the other thing we need to do with Airbnb is look at their balance sheet so this right column is the June 30th 2024 numbers you can see $7.9 billion in cash 3.3 $3.4 billion worth of short-term Investments That is $11.25 billion worth of cash on the balance sheet if you pull that out from the $72 billion market cap that I talked about earlier you get a 61 billion dollar Enterprise Value so that's essentially what we're paying for the stock as investors or for the company as investors the other thing that Airbnb gets to do is they get to invest $10.3 billion on behalf of customers these are funds receivable and amounts held on behalf of the customers so when you pay for an Airbnb you pay for it up front even if that stay is going to be 6 months from now in between over that period of 6 months Airbnb gets to hold your cash gets to generate interest on that cash that alone is a phenomenal business that's this line right here $226 million in the most recent quarter 428 million over the first 6 months of 20124 so not only is the business doing well in generating cash they're generating cash from the cash that's simply sitting on on the balance sheet so we have a $61 billion Enterprise value for a company that has free cash flow over the past 12 months of $4.3 billion so that is about a 14 times free cash flow multiple that you're getting for Airbnb remember a company that's still growing at nearly double digits expected to be 8 to 10% in the back half of this year now maybe free cash flow isn't the right multiple to use maybe you want to use earnings multiple so on a trailing basis the pr PE ratio is about 15 there are some one benefits in there so if you look at a forward basis that's based on analyst estimates the PE multiple is about 25 I think this is a pretty reasonably priced stock given the fact that it's growing at nearly double digits and one of the reasons that I think this is an opportunity is this is a company that continues to be Innovative and continues to grow they talked a lot about this on the conference call and that was that the Airbnb platform has long been known for short-term stays and hotels were the competition Brian chesky and this was kind of a surprise I thought said that they're going to probably lean into having more hotels on the platform so now this becomes a situation where Airbnb maybe isn't just for a specific kind of state maybe it's for every state and you build a little bit more Customer Loyalty instead of working with multiple platforms depending on if I'm traveling alone or I'm traveling with my family or a large group maybe all of that goes to Airbnb there's a lot of optionality to add features into the Airbnb platform and I think that's the thing that they're looking at experiences something they've talked a lot about on the conference calls they're experimenting with that in the kind of unique and maybe sometimes strange experiences that they've launched over the past few months but I think 5 10 years from now this is going to be a company that we're going to look back and we're going to say hey this Revenue grew at a compound annual growth rate of in excess of 10% and a company that you can you can get for a multiple like it's trading for today and compound their growth in double digits that's how you get asymmetric returns I don't think there's anything fundamentally wrong with air BNB today I think this is one of these Market reactions that should be very expected we knew that consumers were a little bit weak they were traveling a little bit less no surprise that Airbnb said the exact same thing on their conference call but there's a lot of opportunities for the company to expand whether it's in new markets in international markets whether it's with new products like hotels or experiences or this AI concierge concept that seems to be kind of put off a little bit but still could potentially be the future for Airbnb I think there's still a bright future this a stock I'm going to be looking to add on this weakness but let me know what you think about the results leave your comments in the comment section below don't forget to subscribe to asymmetric investing thanks for watching everybody see you here next time