Buying Airbnb and MercadoLibre

With a bit of a down week in the market, both Airbnb (ABNB) and MercadoLibre (MELI) have fallen and held under 25% of fair value. Now looks like a very attractive time to add them to our portfolio. They have been added to the Buy List at their close prices today!

Airbnb is down about 10% from when we added it to the Watch List last week. A Morgan Stanley analyst lowered his price target from $110 to $80 based on some paper napkin estimations on its supply growth over the next 5 years or so. Stock drops due to random analyst downgrades don't concern me much, particularly when they are based on something as speculative and surface as estimated supply growth.

The analyst notes that the company only grew its available properties by 12% over the last 4 years and "naturally" expects that will slow to 7% for the next 4. And... that's it? No mention of some pretty remarkable travel conditions over these last 4 years? No mention of price elasticity? No mention of the longer-term stay trend? Seems like lazy analysis to me.

We will take it though. I think this is a great place to get into Airbnb.

As for MercadoLibre, it was very close to 25% undervalued for the last few weeks, and dipped a few percentage points this week to cross our buying threshold.

There's really not a whole lot new from the original write up on the stock. This is the "Amazon of Latin America", and also the "PayPal of Latin America". Given Brazil's (and the rest of LatAm's) under-penetration with not only e-commerce, but also internet access, there remains a long growth ramp ahead. MercadoLibre remains founder-led and benefits from multiple network effects. This is a very attractive business at a more-than-reasonable price, and I'm thrilled to add it to the portfolio.