Visit our website for more: https://www.overlookedalpha.com<br /><br />Should you buy Airbnb stock? Airbnb produced a strong earnings report yesterday and the stock jumped over 10%. That takes the market cap of the company to $84 billion. With 9.6 billion of cash and 2 billion in debt the enterprise value is just over 76 billion. <br /><br />Highlights from the report was a 40% increase in revenue to 8.4 billion, a net income of 1.9 billion, which represents a net margin of 23% and the company's first full year of GAAP profits.<br /><br />But Airbnb retains one key advantage which is that its properties are being used not just for vacation purposes but for working trips and longer stays. <br /><br />The company is also being managed effectively and continues to improve the product. Moreover, the shareholder letter hinted at some ‘big ideas’ that could potentially expand the company’s core product. <br /><br />Let’s assume Airbnb can grow net income 20% per year for the next 10 years. That would bring net income to around 12 billion. A 25 times multiple on that figure would give the company a valuation of 300 billion which works out to an investment return of 14.7% per year.<br /><br />So as you can see, investors are already pricing in significant future growth. But it's hard to bet against another set of record results which is why I continue to give the stock a bullish rating.
