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May 1, 2022
[2 min Read]
Gather around my fellow degenerates, I have a totally well researched earnings play on ABNB that cannot possibly fail. The general idea is this; stock price too high, stock price fall soon. You will be purchasing puts if you want to participate.
You might remember that ABNB started trading in 2021 at over double its initial offering price, during the absolute peak of IPO mania.
While the majority of IPO's in 2020/2021 have heavily corrected, ABNB (and segments of the travel industry at large) have remained stubbornly overvalued.
The stock market recently has punished tech companies that were priced beyond perfection. ABNB has avoided this fate and is only down roughly 10% YTD. I think they have avoided the carnage because they are in the travel industry, which is significantly overvalued. For example;
$MAR is trading above pre-covid levels at a P/E of over 50
$BKNG is trading above pre-covid levels at a P/E of almost 80.
ABNB has a P/E of nothing because they are an unprofitable tech company with a market cap of 100B.
These companies are trading at high multiples due to the expected Travel Boom™ that has been hyped since lockdowns began over two years ago.
However, business travel, which is by far the most lucrative segment of travel, is not expected to recover for years, if ever...
The Travel Boom™ is a classic case of buy the rumor sell the news. The stock market has been methodically correcting over through the past six months, and travel is probably up next. We all know what happens to overpriced tech companies come earnings time.
TLDR; the travel industry is priced beyond perfection. ABNB is the perfect vehicle to short the industry because it is an unprofitable tech company. Even if they report a profit for Q1 they will still be overvalued. You wouldn't want to short $MAR because it is the gold standard in many boomer portfolios, and can take years to bleed out. BKNG is too expensive and not enough volume on options chains.
5 June 22 $130 PUT
2 Jul22 $100 PUT
2 Jul22 $115 ABNB PUT
Will look to add more of the $130's on Monday and Tuesday. $130 is a key support level and if it breaks we are heading below $100. June/July expiry in case we get another bear market rally.