Airbnb Q4 2022 – Unrivalled.
- Airbnb reported results that were in line with expectations but the recovery in travel, especially in China, allowed the company to guide ahead of expectations for Q1 2023.
- Q4 2022 revenues / EPS were $1.9bn / $0.48 compared to forecasts of $1.9bn / $0.27.
- Q1 2023 revenue is expected to be $1.75bn – $1.82bn ahead of forecasts of $1.7bn which caused the shares to rally 10% in after-hours trading.
- Although the company does not operate in China, the ending of Covid Zero has boosted travel in Asia which saw a bounce of 40% YoY in Q4 and I expect this will continue for this year.
- This is because I think China will stimulate its economy in Q2 2023 which in turn will drive more spending and more travel overseas by Chinese citizens and residents.
- I like Airbnb on its fundamentals as it is utterly dominant in its space where it remains effectively untroubled by competition.
- A marketplace in this position is a license to print money which I expect Airbnb will eventually do.
- However, while I like the fundamentals, the valuation of the shares is another matter.
- Assuming that Airbnb makes its 2023 revenue estimate of $9.4bn, then the shares are currently on a 2023 EV/Sales multiple of 8.3x and a 2023 PER ratio of around 37x.
- Much as I like the company, I think that there is way too much is baked into the shares already and prefer to look elsewhere.
GlobalFoundries Q4 2022 – Perfect position.
- GlobalFoundries also reported good results and introduced forward quarter guidance for the first time in a sign that its recent re-organisation has improved both visibility and confidence.
- Q4 2022 revenues / EPS were $2.1bn / $1.44 compared to forecasts of $2.1bn / $1.33.
- The macro business environment remains difficult and this was reflected in the guidance which implies that there will be little to no growth YoY in H1 2022.
- Given that many of the downstream players are winding down inventories, this is not a big surprise and I continue to think that this might last a bit longer than anyone thinks.
- GlobalFoundries is profitable and generating cash which puts it in a good position to sit out the downturn.
- Furthermore, I continue to think that it is very positioned to benefit from the deepening rivalry between the USA and China.
- Here, customers are looking to diversify their chip manufacturing away from Taiwan, China and Korea and with its factories in Europe, the USA and Singapore, GF is very positioned.
- Hence, I think it can gain share over the next few years which will help it to grow earnings.
- This is needed as the shares are currently trading on a 2023 PER of close to 30x which is more than double the PER of both Qualcomm and TSMC.
- Consequently, while I like the fundamentals of GF, like Airbnb, the valuation looks challenging compared to its peers and rivals.
