Core Insights - The short-term rental market is a significant and growing sector within the travel industry, projected to exceed $1.1 trillion by 2029, with younger generations increasingly favoring platforms like Airbnb [3]. Company Overview - Airbnb is a leading player in the short-term rental market, facing challenges such as local regulations and competition from homeowners' associations [2]. - The company operates primarily as a software platform, which allows it to maintain a low capital expenditure (capex) compared to traditional industries [6]. Financial Performance - Airbnb's capex was only $14 million last quarter, less than 1% of its revenue, while its free cash flow reached $4.4 billion, representing a remarkable 40% free cash flow margin [7][10]. - The company has utilized its cash flow to fund growth initiatives and conduct stock buybacks, repurchasing $3.5 billion worth of its stock over the last 12 months, which is about 4% of its total market capitalization [11]. Valuation Metrics - Airbnb currently trades at around 20 times its free cash flow, which is below its 2024 high of 29 and slightly under its 3-year average of 22, indicating it may be undervalued compared to its competitor Booking Holdings, which trades at 23 times its free cash flow [12]. - Given its strong cash-producing business model and lower market capitalization compared to Booking Holdings, Airbnb presents an attractive buy-and-hold investment opportunity [13].