TMTB Morning Wrap

QQQs flat as yields tick down slightly. BTC +30bps. More Tech China +3% strength as Xi meeting with China Tech leaders. Lots to get to, so let’s get straight to it - earnings first then News/Research….

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ABNB +13%: Better Q4 GBV and nights and inline Q1 guide

Sentiment had been mixed going in (was a HF short) so the better Q4 beat along with inline guide and better margin guide for the full year will be welcomed by bulls after a pair of quarters of iffy results and fears over continued margin compression given co has talked up increasing investments

Q4 GBV $17.6B vs street at $17.2B
Q4 nights beat at 12% vs street at 10% and bogeys of 11% - 400bps acceleration
Q1 nights guided to relatively stable compared to Q4 excluding Leap day. ADR to slightly increase ex Leap day. Roughly in line with bogeys
FY EBTIDA guide to “at least 34.5%” while bears were thinking lower (around 33% t high end) Full year, will invest $200-$250M towards launching and scaling new businesses.

Bulls will love this print and point to margin guide and say ABNB has plenty of room to expand into different adjacencies, in particular advertising which could potentially add 10-30% to EPS (co said they would talk more about moving beyond the core in May and said new expect to launch new products every year that would be $1B of revs once fully scaled, starting near travel vertical but expanding over time). In other words, bulls will like to call ABNB “the Amazon of Travel” and this print finally gives them some ammo that co is on the right track. The co is accelerating nights growth which means their investments are beginning to bear fruit and while 20x EBITDA is more expensive vs EXPE/BKNG, ABNB has plenty of runway as its underperformed EXPE/BKNG by 40% in the last year and still trades sub 15x ‘27 FCF. Bears will say why pay up for ABNB when EXPE/BKNG growing nights at a similar pace and ABNB faces similar secular issues given AI enabled OTA agents.