The Coming Collapse of AirBnB & Short-term Rentals.

hey everyone me Kevin here is it Airbnb

about to collapse so far we have been

told by Airbnb that demand is still high

and strong and everything is good don't

worry here there is no problem at Airbnb

at the same time we've seen virtually

every single real estate company seize

up but airline travel is still pretty

dang strong and so it makes me wonder

maybe Airbnb is right maybe Airbnb is

the exception in the real estate world

where Redfin is closing down their home

flipping business and now laying off

over a total of 27 of their staff this

year you've got Zillow that got out of

the home flipping business last year and

they've started laying people off you've

got Open Door who's uh or even was a

SPAC home flipper that now is deciding

they don't really want to be a home

flipper anymore and they want to become

a housing Marketplace nobody knows what

the hell they're doing in in real estate

and it's probably because they haven't

taken the zero to millionaire real

estate investing course where you

actually learn how to build wealth with

the sixty percent off coupon code down

below but you've got companies like

Airbnb that have quite frankly been

killing it and again it makes sense

because air travel is killing it right

but is air travel potentially unique

because see air travels entire Market uh

that is its availability of flights and

planes and Pilots the entire available

Marketplace of of airplane tickets has

actually shrunk by 10 since 2019 but

demand is a way higher now than what it

was in 2019 so you've basically got more

demand going into a smaller box and

that's why we feel so overwhelmed at

airports lately with delays too little

staff and everything just feels like

chaos it's getting slightly better but

it still feels pretty bad so this is why

the airlines are actually doing pretty

decently and they're able to start

paying off their debt because they have

a smaller box and they're just fitting

more people in it and charging more

money for it

so what about Airbnb and are there some

potential red flags that could indicate

what Airbnb is telling us isn't actually

true and could Airbnb be a short

oh I can't believe I would say that

because generally meat Kevin doesn't

short meet Kevin only goes long

all right so what do we got about Airbnb

that's making me a little distracted

well there's this company called vacasa

they're a uh they're basically like a

middle person between a platform like

Airbnb where Airbnb allows you to list

short-term rentals and people can view

them and rent them when people do Airbnb

takes a little cut

then there's the owner of the property

somebody who's a landlord who ultimately

wants to take the leftover money after

all expenses uh from the Airbnb fees

that people are paying the total listing

fees so Airbnb gets their cut and the

rest generally goes to the owner of the

property well sometimes there's a

management company in the middle a

management company in the middle might

have their own website where they can

advertise short-term rentals or they

might list them on Airbnb they could buy

property management companies that have

a bun like a portfolio of properties

owned by other people and basically they

go in the middle and there's this this

company vacasa has given us some really

interesting insight into the vacation

rental industry that's quite a bit of a

contrasting story to what Airbnb is

telling us then when we compare that to

what Airbnb actually told us I think the

red flags start becoming really apparent

and I'm going to show you in this so

let's go start with the earnings call

for vacasa do keep this in mind that if

airbnbs and this was my expectation just

based on anecdotes in the market my

expectation was that airbnbs are

starting to kind of hit a wall starting

in in October November I'm hearing a lot

of people talk about Airbnb sitting a

wall but I don't want to invest my money

on anecdotes right I like facts and so

that's why I was looking at the Airbnb

conference call and earnings report

thinking okay like where's the Slowdown

I'm I'm not seeing this slow down yet

but are we looking in the rear view

mirror because you know when you're

looking at an earnings report from last

quarter you're looking at September

August and July which was really the hot

summer travel season and it was

definitely a hot summer travel season uh

so but if you hit a wall now well that's

going to be a red flag for Q4 and so I

looked at the vacasa earnings call and

take a look at what I found

over here they say our fourth quarter

Revenue expectations remember they're a

company that makes money by collecting a

fee doing vacation rentals potentially

putting stuff on Airbnb right and then

whatever is left after the Airbnb fee

and whatever the owner wants goes to

vacasa and and people might say well the

owner just deserves less but if the

owner deserves less which might be true

the owner might say I'm just going to

sell my property and get out of vacation

rental business I'll just contribute to

more houses for sale housing prices will

fall more that's kind of the trajectory

things are going at anyway and then what

happens well then they cost a loses even

more clients and then they make even

less Revenue so look at this earnings

call that just came out they say our

fourth quarter Revenue expectations are

lower than implied fourth quarter

guidance we issued in August so lower

Revenue than they guided we are

experiencing some softness and

variability in guest bookings that began

after the strong summer season that

weakness was noticeable in December I'm

sorry in September which is the last

month of the quarter so Airbnb could

tell you oh yeah we're killing it we're

killing it you know because because

really you only started noticing the

softness maybe at the end of the last

quarter right and this is because I

remember that and has become more

pronounced in the fourth quarter

remember we are are already about six

weeks into the fourth quarter we're

about halfway through the first uh

fourth quarter it's weird because we're

just now getting earnings reports for

the third quarter which ended September

30th but October is over and half of

November is basically over so we're

halfway done with Q4 already

we expect fourth quarter ebitda that's

earning basically near bottom line

earnings I'm not going to explain an

accounting course in this one here but

we'll keep it simple earnings before

interest taxes depreciation amortization

blah blah right okay we'll be in the

range of negative 75 million to negative

65 million again this is lower than

implied due to lower Revenue but it's

also a function of higher operational

costs uh going into the fourth quarter

not fully realizing the inefficiencies

from operational initiatives finally we

are not issuing 2023 guide so I wrote

some notes here because I'm like this is

so bad I looked at their cash flow

statement and their balance sheet and

I'm like well if they end up losing 70

million dollars they've only got a cash

burn of five quarters left and then they

go bankrupt because when you originally

looked at their p e ratio like wow this

this two dollar stock is is actually

looks really cheap but then then you're

like wait but is it a value trap right

and like I wouldn't touch this freaking

thing with a 10-foot pole but and I mean

it might float up because right Rising

tide lifts All Ships right but they're

they're projecting almost no growth

potentially even a decline in year over

year gross bookings okay that's a huge

number that Airbnb pays attention to uh

so they overspent on staff over here

vacasa at the peak uh and and overpaid

probably for properties they don't

actually own properties but they can buy

a portfolio that somebody else manages

so they potentially overspent at Peak

they're they're complaining that their

sales process just sucks and that's why

they're having a harder time attracting

people they spend a lot of time in their

earnings call talking about how they're

getting this new customer resource

manager online and once that's online

then they're going to be so much more

productive and I'm like dude if you're

relying on a customer resource manager

you don't know how to sell you don't

know how to run a business this is

something that we're actually talking

about in the elite Hustlers University

course it's all about business and

increasing your top line I mean people

spend so much time getting addicted to

crms and spending money gives Salesforce

more money that's not how you sell if

you're relying on that you're screwing

yourself and it's okay to have a CRM but

you actually don't even have to pay for

one we talk about how you can get one

for free a really really good one you in

in the elite hospitals anyway that's

linked down below uh also has that 60

coupon uh but anyway let's look at some

of the other pages in in this earnings

call and then what I want you to see is

the Airbnb call all right so moving

ahead a little bit listen to this the

weakness is relatively new it kind of

began towards the end of the third

quarter ah so Airbnb would actually be

justified in telling you oh everything's

great because the weakness is actually

you know relatively new and maybe it was

just a bad week you know you got to

picture these people in their board

meetings before they actually go have an

earnings call like okay guys like the

last quarter of September was not good

but everything else was great and then

that's all they talk about is how great

everything was so it kind of began

towards the end of the third quarter

particularly with forward-looking

bookings or Advanced bookings and seeing

some variability in our booking Trends

deviating from previous years it's tough

to identify the driver maybe it's

consumer demand maybe it's macro or

maybe it's just the vacation rental

market that's just slowing down and it's

hard to pinpoint but we're seeing it

across all channels so in other words

they're just getting screwed and pounded

everywhere uh they talk about their CRM

BS I wrote a little note that no that's

BS they just can't sell which is

probably true this I wrote down they're

basically a monkey in the metal company

right again I explained that earlier

where Airbnb is going to take their fees

the landlord wants a minimum amount of

fees otherwise they're going to sell and

then they Costa loses their client uh so

so they they kind of get screwed in the

middle they take the big loss this is

why I wouldn't touch this with a 10 foot

pull and I pay attention to companies

like this too because I want to see what

some of these companies are doing who

handle short-term rentals for the

purposes of house hack as well look if

the short-term rent the market dies

we'll just do all long-term rentals or

our medium short-term rentals right so

this is a very important thing to pay

attention to remember if you're an

accredited investor make sure you invest

before November 30th to get the maximum

warrants possible so they're kind of

like free call options but read all the

details on that uh in the subscription

agreement at househack.com on one hand

churn okay so yeah owners are

potentially dumping and not buying

short-term rentals it doesn't surprise

me that people aren't buying short-term

rentals right now because why would you

uh not seeing any meaningful uh changes

in cancellation rates that are notable

it's just bookings that are coming in

right uh different so I make some little

notes about comparisons to Airbnb uh and

and then they actually suggest that

maybe a way they can make more money is

trying to convince people to Airbnb

their home when they're not home and I'm

like that is the stupidest thing I've

ever heard I will never Airbnb my home

so somebody else can roll around in my

bed when I'm not there like that is that

is beyond stupid but uh that just shows

you that they're grasping at strong

draws and that they're kind of desperate

so now I want to show you the Airbnb

call because it's a little bit of a

contrast the Airbnb call initially only

talks about how much demand they have to

talk about how great everything is

stronger demand demand for domestic and

non-urban travel remains strong and sure

is it possible that vicasa just has a

small portfolio on demand for all of

their properties this crap all of a

sudden compared to uh you know prior

quarters all of a sudden they just have

like a terrible reputation sure maybe

but I don't think so because here they

talk about hey travel isn't getting

seeing a pullback you want to go travel

so you can see time spend time with your

friends see your family more

inspirational type of travel and I'm

thinking to myself gosh these guys are

selling it hard man I mean this is like

Elon going in telling you Tesla's gonna

be worth more than Apple and Saudi

aramco combined just days before he goes

and dumps 20 million shares on you you

know all right okay so a lot a lot of

good news here from Airbnb about strong

demand and inspirational travel blah

blah so where's the red flag all right

and then here it is look at this the CFO

is asked about Q4 and backlog and what

he says is in terms of the backlog for

2023 it's really too early to tell but

what we're seeing is continued strong

demand for travel overall and I'm

parsing this when I first read this I'm

like oh this is this is good

but notice he's not saying we're seeing

continued strong demand for airbnbs

he's saying we're seeing continued

strong demand for travel sure that could

be justified in that you're seeing

strong demand in the airline business

and that's true you are because the

airline business is smaller than what it

was pre-pandemic

so yes you are still seeing strong

demand for traveling and if you look at

2022 or 2021 you're still seeing

stronger demand but that doesn't mean

you didn't just hit a wall especially

when you're saying it's too early to

tell you a good forecast for the

beginning of next year and this in uh

this this idea of strong demand for

travel does not mean strong demand for

airbnbs and when you look back at

historic levels of growth we're seeing

stable to increasing demand okay so

going back to 2019 but Airbnb you're

valued as a growth company if your

growth collapses and your growth is you

know one percent more than 2019 people

are going to lose their crap remember

Airbnb blew up during the pandemic

because people didn't want to go to

hotels

and then we have strong bookings on the

books for Q4 but then there'll be fewer

uh on the books it kind of tails off

into 2023. so this is kind of like in my

opinion a lot of BS with just enough of

an early Red Flag Warning that vacation

rentals are about to hit a freaking wall

and it is possible that Airbnb collapses

if their growth rate collapses okay

Airbnb let's look at your numbers in Q3

2022 y'all had about 2.8 billion dollars

of Revenue and now you're trying to tell

me that your revenue is stable or

stronger than 2019. you all had a

fraction of the revenue in 2019. how do

I know that because all I have to do is

scroll to a quarterly summary from a

different earnings release that you have

which I've injected into this PDF and

look at the queue the quarterly numbers

for 2019. you're knocking on the door of

three billion dollars right now two

point eight eight right and what are the

numbers you have here dude you barely

had three billion dollars in three

quarters over here in Q3 you are at one

six in Q4 you were at 1.1 billion

dollars and look at that decline you

tend to see going into Q4 the point is

do I really want to see uh not only that

seasonal decline but then you

referencing 2019 it's entirely possible

that their bookings are hitting a wall

and look at that in Q4 you do tend to

see a decline but they're also not just

talking about a potential seasonal

decline over at vacasa they're talking

about a potential real decline bookings

going into all of 2023 for reasons that

they're not even aware of Airbnb is not

giving us the red flag other than the

fact that they're now alluding towards

comparing themselves to 2019 and not the

prior quarters in my opinion if that

strong growth rate of Airbnb goes down

and we start seeing in negative live

year-over-year growth which is entirely

possible if in fact we could just look

at Q4 2021 was at 1.5 bill imagine if we

went negative or the growth rate went

from the 29 27 29 it is now year over

year to something like five or ten

percent valuation of Airbnb could

collapse and the last thing anybody

wants to see is a collapsing valuation

so if you're in the vacation rental

market leave me a comment down below if

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