Airbnb's Cash Cow Can Thrive Despite Its Challenges - The Globe and Mail

The Motley Fool's Bradley Guichard analyzes Airbnb's investment potential despite regulatory challenges facing the vacation rental platform.

Airbnb operates in a massive travel market projected to exceed $1.1 trillion by 2029, with younger generations driving demand for short-term rentals. While the company faces regulatory hurdles in major markets like NYC and Paris, its software-based business model generates exceptional cash flow with minimal capital requirements compared to traditional businesses.

• Airbnb generated $4.4 billion in free cash flow, representing 40% of revenue - an impressive margin for any company
• The stock trades at 20 times free cash flow, below its 2024 high and cheaper than competitor Booking Holdings
• Management returns cash to shareholders through $3.5 billion in stock buybacks over 12 months, reducing share count by 4%
• Demographic tailwinds favor continued growth as younger travelers prefer Airbnb over traditional accommodations