We recently published an article titled, Jim Cramer is Talking About These 12 Stocks. In this article, we are going to take a look at where Airbnb, Inc. (NASDAQ:ABNB) stands against the other stocks that Jim Cramer has talked about.
During September 30’s episode of Mad Money, CNBC’s Jim Cramer delved into the previous three months and the market’s events. He identified some positive developments amidst the turbulence in the market.
Cramer highlighted that Dow inched up 17%, the S&P 500 went up 42% while Nasdaq gained 38% during the months. He remarked, “For once, good news was actually good news and interesting.” He went on to say that miracles still happened in the stock market’s third quarter. He pointed out that July, August, and September yielded remarkable returns, even highlighting the typically troublesome month of September, which saw the broader market rising significantly.
Cramer elaborated on the lead-up to the Federal Reserve’s decision to cut rates by 50 basis points. He characterized the economic landscape as having “no landing at all,” explaining that the economy continued to grow, inflation decreased, and unemployment ticked up. He suggested that the central bank laid the groundwork for a significant rate cut, which was the reason that there was no panic on Wall Street after the cut. The former hedge fund manager also praised Federal Reserve Chair Jerome Powell for achieving the challenging feat of a double rate cut without shocking the markets.
Moving on, Cramer talked about how the market’s breadth expanded as well, with many sectors gaining traction beyond the dominant Magnificent Seven tech stocks. He noted that a variety of industries, including banks, utilities, retail, healthcare, housing, and transportation, enjoyed their moment in the spotlight.
As for the upcoming election, he referenced Michael Cembalest of J.P. Morgan Asset Management, who described it as “the most polarized election in 100 years.” Cramer observed that, despite the political drama surrounding the elections, Wall Street remained largely unfazed, even in response to significant events like Vice President Kamala Harris potentially replacing President Biden on the Democratic ticket and the attempted assassination of former President Donald Trump.
Cramer also highlighted a shift in the housing market, pointing out the first signs of relief from formerly soaring inflation figures. He suggested that an increase in available homes could be the breakthrough needed to address this intractable asset class that has resisted price declines.
In terms of international markets, he noted that the Chinese market staged a rally, even in light of dismal economic news, owing some of this movement to government-ordered buybacks and influxes of capital.
Cramer commented on the ongoing speculation about stagflation, particularly concerning oil prices, reminiscent of the oil crisis in 1973. He addressed the ongoing conflict in the Middle East, mentioning that Saudi Arabia had abandoned its unofficial price target of $100 per barrel in favor of increasing production.
While many believe that oil prices could soar at any moment, Cramer expressed skepticism, suggesting that although a spike could still occur due to geopolitical factors, he thinks those fears may be overstated.
Reflecting on the past nine months, he concluded that despite the potential for stagflation, 2024 has surprisingly turned out to be a great year for the stock market, defying expectations.
Our Methodology
For this article, we compiled a list of 12 stocks that Jim Cramer mentioned during his episode of Mad Money on September 30. We listed the stocks in ascending order of their hedge fund sentiment as of the second quarter, which was taken from Insider Monkey’s database of more than 900 hedge funds.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
Jim Cramer On Airbnb, Inc. (NASDAQ:ABNB): ‘Buy A Little More’
Airbnb, Inc. (NASDAQ:ABNB)
Number of Hedge Fund Holders: 63
Airbnb (NASDAQ:ABNB) operates a globally recognized platform that connects hosts and guests. The company facilitates a wide range of accommodations and experiences. The marketplace is accessible through both online and mobile platforms.
It allows users to book various options, including private rooms, primary residences, and vacation homes. During September 30’s Mad Money episode, Cramer suggested to “buy a little more” of Airbnb, Inc. (NASDAQ:ABNB), mentioning it being down 7% over the past year and that he likes it.
Cramer emphasized that the company is run by Co-Founder Brian Chesky and called him conservative. Under the leadership of Chesky, the company has navigated significant challenges, including a unique venture into breakfast cereals during a financially difficult period in 2008 to keep the business afloat.
Recently, during his address at the 2024 Skift Global Forum, Chesky posited a vision for the company’s future and said that a new phase of the company is coming. He expressed optimism about the potential for innovation, projecting that the company might unveil two to three initiatives each year capable of generating an additional billion dollars in revenue annually.
Chesky emphasized the importance of promoting the advantages of hosting and advancing the tools available to hosts. The focus has contributed to a significant increase in active listings, surpassing 8 million in the second quarter, driven by growth in various markets around the world.
Under Chesky, the company has expanded in under-penetrated markets, an important area of focus, with performance in these regions outpacing core markets in terms of gross nights booked. It is also important to note that Airbnb (NASDAQ:ABNB) exceeded expectations in the second quarter, generating $1 billion in free cash flow and reported revenue of $2.75 billion, an 11% year-over-year growth.
Polen Capital stated the following regarding Airbnb, Inc. (NASDAQ:ABNB) in its first quarter 2024 investor letter:
“During the quarter, we initiated new positions in Sage Group and Airbnb, Inc. (NASDAQ:ABNB) and added to our existing position in Globant.
Airbnb is a great business model, according to our research, due to its two-sided global network effects. For several reasons, Airbnb has a better mousetrap with its supply growth engine, with its hosts having a far lower cost of capital and more flexibility than hotels. We think private rentals should continue to grow their share of overall accommodation stays, potentially up to 30% of lodging or higher over the long term, letting the private rental gross booking value grow at a low double-digit rate. We also think Airbnb should continue to gain share within the private rental market as its global network effects strengthen, allowing for mid-teens revenue growth. With flat to rising margins over time, significant free cash flow generation, and a management team that has demonstrated its owner orientation, this should result in high-teens EPS growth over time. While the path there will not be linear, and it is a more discretionary spending-tied business, we think the long-term secular growth opportunity is very compelling.”
Overall, ABNB ranks 4th on our list of stocks Jim Cramer is talking about. While we acknowledge the potential of ABNB as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than ABNB but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
Read Next: $30 Trillion Opportunity: 15 Best Humanoid Robot Stocks to Buy According to Morgan Stanley and Jim Cramer Says NVIDIA ‘Has Become A Wasteland’.
Disclosure: None. This article is originally published at Insider Monkey.