We’ve revisited several businesses in the Intrinsic Value Portfolio over the past year. So far, we’ve tended to stick with these positions because we know them well, have followed them closely, and have grown comfortable with them.

Today, I want to catch up on one of our largest positions, Airbnb. After sitting flat for a year, the stock has finally started to move in the right direction, though new challenges have emerged. How consequential those are, we’ll explore.

It boasted great natural light, was spacious, and was a short five-minute jaunt to two different beaches. The only hiccup we had was the dryer door refusing to open. Since it was raining heavily, we needed someone to fix it. My wife messaged the host, and she came right on over. We gave her five stars.

Just think for a second about what happened there. A total stranger in a small town handed a few foreigners the keys to her home. When something broke, she showed up in the pouring rain to fix it. And the company that facilitated it all never even set foot on the property.

That’s why Airbnb wields $100 billion in market capitalization and holds a weighty position in our Intrinsic Value Portfolio. It’s also why I was so uneasy when I noticed some of the numbers looked a little wobbly.

I’m an eternal optimist, so let’s start with the good stuff. Since going public, Airbnb’s revenue has compounded at 19% per year. And its cash from operations has compounded at 39% per year. Cash growing twice as fast as sales signals a business that gets more profitable as it grows. I’ll admit, these numbers make me downright giddy — Yes, I’m a little strange.

But when I zoomed in on the last couple of quarters, some of that excitement faded. From 2024 onward, revenue growth slowed to the high single digits, and operating cash barely grew. These are my normal causes for worry in a business.

When you’ve developed some attachment to a business, whether because you like the CEO, the business model, or your returns, blindness to its shortcomings can come easily, which is why I try to be a harsh critic of any of our holdings.

In Airbnb’s case, I reflected on one defining question to keep me honest: are the business fundamentals starting to deteriorate, or is the company deliberately stepping on the brakes to think long-term and grow even longer? The trick is telling these two possibilities apart.

Before we diagnose any problems, let’s look at how this big, beautiful cash-printing machine works, because it’s stupid simple.

Airbnb acts as a matchmaker (no, not like Tinder) between hosts with spaces to rent and guests who need a place to stay. The host might offer a basement suite, a ski cabin, or a downtown condo in exchange for a guest’s time and money. Airbnb’s role is to bring them together and handle discovery (of great places to stay), payments, reviews, customer support, and even insurance.

Another perk of running a business that gets paid months before delivering a product is access to a float that can generate income. Say you want to go to Barcelona and start planning in January for a trip in June. Airbnb receives that money but doesn’t need it until later. In the meantime, it earns interest (though the company is increasingly rolling out the option to reserve now, pay later).

You can kind of think of it like a coat check. You hand over your coat; the coat check hangs onto it until you come back. But in Airbnb’s case, it can rent your coat out while it waits for you to come back, earning interest. Warren Buffett helped build Berkshire Hathaway on this concept of float using insurance premiums. Airbnb’s float number is much smaller, but it still generates hundreds of millions of dollars a year. We treat this as a bonus paid on top of owning a wonderful business.

Airbnb is a capital-light toll booth on the growing travel market. Its brand is strong enough to bring customers in for free and keep them coming back. Airbnb’s trust with hosts and guests is nearly unmatched. And Airbnb has several new growth drivers that can continue boosting revenue for years to come.

When Shawn first pitched the company, he pointed to three potential earnings drivers:

So the next question is: how have these levers performed since the first pitch?

Bookings: a clear win. Gross bookings have continued to grow in the double digits and actually accelerated to 16% in the first half of 2026. That’s impressive growth given the rocky geopolitical situation and the mounting impacts of inflation. Fortunately, the world still loves to travel, and when the world travels more, Airbnb benefits.

Take rate: push. This is the lever that hasn’t really moved, even though there’s a temptingly easy way to do so in sponsored listings. This was, and still is, the most obvious way for Airbnb to boost its take rate, yet Airbnb has continued to kick the can. The idea is straightforward enough, though — allow hosts to pay to show up at the top of relevant keyword searches, based on location or housing type, as a way to drive more traffic to their property. It’s no different than merchants on Amazon paying to have their product listed first in a given search result.

For the time being, CEO Brian Chesky has said they’re more excited about integrating AI-powered search experiences into their app. For example, you describe to Airbnb the type of trip you want to have and your budget, and the app pulls together a set of listings and an itinerary to choose from.

While I’d love to see the take rate expand sooner rather than later, patience is a virtue, as they say. The counterargument is that adding ads to its platform subtracts from the user experience, potentially offsetting any additional take-rate expansion.

Margins: TBD. Margins haven’t expanded quite as much as expected. The last two quarters look better than a year ago, but this lever hasn’t won quite yet. So the report card here is a win, a push, and an incomplete. Not exactly a report card you’d want to stick on a fridge. But oddly, the deeper I dug in, the better I felt about Airbnb’s prospects. It started with an examination of what was happening with one of Airbnb’s biggest rivals.

Booking Holdings has been charging very hard into the alternative accommodations market. It now lists more than nine million alternative accommodations. So if we are looking purely at who is winning by the size of its listing base, Booking would be ahead of Airbnb.

But it’s not that simple. The real winner is whoever the guest chooses to stay with among their options. Booking recently reported 4% growth in alternative accommodations. Solid growth, but nothing too flashy. Airbnb’s KPI nights and experience bookings grew about 10% over the same period. So while these two figures aren’t apples-to-apples comparisons, the gap is wide enough to make the point: Airbnb is outgrowing its biggest competitor.

I can see why Airbnb is beating Booking.com. And it all comes down to the product difference. If I want a hotel room, I’ll probably use Google, which may or may not send me to Booking or Expedia. But if I want a whole house to rent with my family or some friends, I’m going right to Airbnb’s app or website.

If I’d brought my mom and dad on our Oregon trip, the trip’s accommodation dynamics would change. With a hotel, we’d need to juggle multiple rooms on different floors and reunite over a mediocre buffet breakfast. With an Airbnb, everyone shares the same house, one kitchen, and one big dinner table, so we get a more authentic experience. That’s an experience hotels can’t replicate. And even Airbnb’s own data shows that guests are booking larger homes more and more often, which would eat into bigger parties that book multiple hotel rooms.

Earlier this year, somebody asked Brian Chesky, Airbnb’s founder and CEO, whether AI chatbots might eventually completely cut Airbnb out of the picture. His reply was straightforward: “A chatbot doesn’t have our 200 million verified identities or our 500 million proprietary reviews. And it can’t message the hosts, which 90% of our guests do.”

That is a large part of Airbnb’s moat. For every successful stay they facilitate, Airbnb gets another review, another verified guest, and another relationship between two strangers who now trust each other. That snowball has compounded for nearly two decades, growing as it rolls downhill. A competitor with billions of dollars could probably build a slick app in a year or two, but it could never replicate Airbnb’s trusted reviews.

That’s why I’m perfectly comfortable walking my four-year-old son into a random person’s house on the Oregon coast.

If we know the moat is healthy, the next question is why the cash flow numbers got wobbly. Isn’t a wide moat supposed to stabilize cash flow? After digging in, I think there were two culprits, neither of which is thesis-breaking.

The first one is simple: Airbnb chose to spend. Costs like marketing and engineering grew faster than revenue for a short period, which squeezed margins. But management directly told investors in 2025 that margins would dip while they invested in the next phase of growth. So punishing management for doing what they said they’d do seems strange, yet Wall Street does it often. Still, I’d take a business that does this over one that has to react when it lets the market down by mistake.

The second culprit was sneakier. In mid-2025, Airbnb launched a feature called Reserve Now, Pay Later, rolling it out worldwide in early 2026. Like buy now, pay later at an online store, guests can lock in a stay without paying upfront.

But remember the coat check reference? Fewer guests are handing over their coats early. It’s like the difference between prepaying for a dinner and then just making a reservation. You’ve booked the table, but the restaurant doesn’t see a dime. In Airbnb’s case, the cash still comes in, just later, and that means Airbnb earns less interest in the meantime.

Management’s thought process for reserve now, pay later, is that it will get people to book even further ahead than before. This should also push night rates a little higher, as users may feel a little “richer” when they don’t have to pay it all upfront. But it has a catch: cancellations. A guest with little money on the line is more likely to back out than someone who is fully prepaid.

In 2024, Brian Chesky told a room full of entrepreneurs that the classic management advice of hiring really good people and then letting them do their own thing was flawed, at least for him. He noted that during the pandemic he took a completely different strategy. He waded back intentionally into the details and ran the company like a founder rather than a manager. Paul Graham was in the audience and wrote a now-famous essay about it called “Founder Mode.”

But the results really speak for themselves in terms of efficiency. In 2025, Airbnb had roughly the same headcount as before the pandemic, yet revenue more than doubled. That’s a heck of a lot of output from the same-sized team. Any management team that can do that has some secret sauce.

On top of that, Chesky has some pretty serious skin in the game, which I always appreciate. He and his two co-founders own a quarter of the business. But the alignment gets even better. Chesky’s salary is $1, the same figure at the IPO and the same number today. So every capital allocation decision that Airbnb makes has a big impact on Chesky and his two co-founders’ net worth.

To unlock his stock options, Chesky must create significant shareholder value. He unlocked the first few tranches, but hasn’t had the same success in recent years. He’s said he plans to donate proceeds from this bonus whenever he unlocks it.

While most of the attention these days goes to how AI will replace Airbnb, I’m less worried about that. After all, AI can’t build houses or host homes for humans to sleep in. The real risk with AI is whether it changes where people begin planning their trips.

Here is why this matters: Booking pays Google billions every year because Google is the landlord for travel. And whoever is the landlord gets to charge rent. Airbnb’s advantage is that it can mostly dodge paying that toll due to the strength of its brand.

If I use a thought experiment and picture my son traveling in 20 years or so for a trip with his buddies, chances are how people plan these trips will be very different than today. Instead of opening an app or search engine, my son may just simply prompt an AI assistant about where he wants to stay. In this scenario, the AI assistant owns the front door. If Airbnb had to pay AI companies to send it guests, then one of its biggest advantages would evaporate.

So far, though, the evidence is pointing the other way. Guests book nearly two-thirds of Airbnb’s nights directly in the app, and that share keeps climbing. Internally, AI is also helping, resolving nearly half of customer service requests without a human. So my rule here is pretty simple: if app bookings keep rising, investors can relax. If they start slipping, it’s time to pay attention and reassess.

What excites me most about Airbnb is that, if you look closely enough, they are improving their product and trying to add lanes to its toll-booth advantages in travel. I see three lanes they’re focusing on.

The first is in adding new geographies. For years, Airbnb did most of its business in just five countries, a stat I found pretty surprising. Now the newer markets are growing nearly twice as fast as the core ones. Brazil grew more than 30% last quarter, and India grew a whopping 60%. India is interesting as it has nearly 1.5 billion people with a rising middle class. That market alone could be a tailwind for multiple decades. The part I love about Airbnb’s foray into new countries is that it doesn’t have to invent anything new. It just replicates the business model it knows works and changes the language, and they’re all set!

The second lane is in hotels. Yes, believe it or not, you can book hotels on Airbnb. This advantage isn’t quite as obvious, though. More than a third of first-time hotel guests book alternative accommodation on Airbnb within a year. So the strategy is to get people to try a hotel, learn the platform, then come back again, this time on a home instead.

The third lane is the experiences and services. This includes things like private chefs, massages, and even photographers. It’s still pretty early, but they have rolled out thousands of experiences, and growth is accelerating.