11 Stocks on Jim Cramer’s Radar

3. Airbnb, Inc. (NASDAQ:ABNB)

Number of Hedge Fund Holders: 66

Airbnb, Inc. (NASDAQ:ABNB) is one of the stocks on Jim Cramer’s radar. Cramer highlighted that the company’s earnings did not meet the high expectations the market had for it, as he remarked:

“Long story short, while the second quarter numbers were strong, Airbnb’s guidance was more guarded… which made investors worry that management was bracing itself for a slowdown… And if they’re going into a slowdown, then it’s hard for Wall Street to get excited about these new growth initiatives… Basically, Airbnb gave us a, what’s called a beat and meet quarter and signaled that its margins would likely contract in the back half of the year. We’re no longer paying up for these kinds of stocks, and in many cases, we run from them… Airbnb is the more richly valued of the companies, trading at almost 29 times this year’s earnings estimates.

In other words, the one that is the most valued was the one that’s went down the most… They’re more than double the multiple of Expedia, that kind of tells you what’s going on here, which sells for only 14 times earnings, okay? Those multiples, by the way, are after Airbnb’s pullback and Expedia post quarter. So Airbnb’s almost twice as costly, alright? Needless to say, when you have a higher multiple, more is expected of you, and Airbnb didn’t meet those elevated expectations, hence the decline…

I gotta tell you, Airbnb is really still just a consumer story… Remember, we are in an environment where the consumers clearly become more value-conscious, and Airbnb’s betting on businesses that require consumers to open their wallets… Of course, I’ve always felt that at its core, Airbnb represents tremendous value…

So let me give you the bottom line of this very complex story: There’s a reason why Airbnb stock tumbled after earnings while Expedia soared the very next day. Expedia had a pure beat and raise with very little hair on it, while Airbnb had a beat, but also gave investors some reasons to worry about its guidance. Plus, Expedia’s got an advantage with much more business-to-business exposure than… [Airbnb]. At the end of the day, I think Expedia’s thriving because of its laser focus on value, while Airbnb is making a bunch of big bets that may or may not pay off in this environment. I say stick with what’s working. I say stick with Expedia.”

Airbnb, Inc. (NASDAQ:ABNB) operates an online platform connecting hosts and guests for booking accommodations and experiences.