While Everyone is Watching Airbnb, Here is What I Will be Watching

Did you hear, Airbnb is going public? A travel company, going public in the middle of the pandemic!

I generally hate talking about what everyone else is talking about. There usually isn’t much value in piling on to a conversation. When I was on a sales and trading desk, I heard a phrase a long the lines of “that is the consensus view” over and over again when I was first starting out. The problem is in a world where there is full and fair disclosure, and we all have access to virtually the same information at the same time, how do you keep from being consensus? There is absolutely no value to telling the world the same thing that everyone else is saying.

That’s why today, while everyone else is going to write about and talk about the Airbnb IPO, which is probably going to be hotter than almost anything we have seen in a long time, I am going to talk about Energy. Everyone is going to look at Airbnb as a proxy for travel and travel demand in a post-pandemic world with a vaccine that is available globally. Here is the title of an article in the FT:

If you really want to know more about Airbnb, I would suggest reading this. Then move on to this. Both of these did a great job of walking through the story and the investment opportunity in Airbnb.

But, I don’t need a super high-profile IPO to tell me about the demand for travel when things get back to normal. Airlines are already beginning to rebound. The US Global Jets ETF (JETS) has more than doubled from the March lows and has been climbing since news of the vaccine a few weeks ago. I own it. The biggest holdings in the fund are United Airlines (UAL), Delta Airlines (DAL) American Airlines (AAL) and Southwest (LUV, can anyone tell me why this is their symbol?).

So the airlines are already telling us that demand for travel is likely to rebound sharply. But that’s just one data point. Ok, fine. Here is a look at Hilton (HLT). It’s trading just below all-time highs.

How about Marriott (MAR)? Almost a triple off the market lows.

That brings me to Energy. Arguably the most hated area of the equity market in the US. I know this because I was in the group of haters. I have had nothing good to say about Energy for nearly two years. I am not talking about clean energy, I am talking about fossil fuels. I am talking about Oil…Black Gold. If Airbnb is going to be a proxy for travel demand and their IPO confirms what we are already seeing from the airlines and two of the biggest hotel companies in the world, then I am going to make the case that that is good for fuel demand as well. That, in turn, will be good for Energy companies. Now, this is just one way to look at it and there are a lot of drivers to the Energy story. This is a well written thought process from Lyn Alden Schwartzer.

Take a look at this chart of Energy Services stocks. It’s been pretty bad for the space but perhaps things are beginning to turn? There are some early indications.

My real point is that everyone is going to watching Airbnb. But we already know that people want to travel. My non-consensus view on this subject is that those planes don’t take off without fuel…fuel made from oil, because they have not put solar panels on the wings of the plane yet. Owning Airbnb at the IPO price will probably be a great trade. Owning it in the after market may be a great trade but it may not be. Maybe the best trade to play a rebound in travel (plus get exposure to the bull case that Lyn is making) is to do it through the Energy sector.

Feel free to pushback, leave a comment if you agree, disagree or simply think I am completely off base.