Daily Brief: Companies Like Airbnb Could Do Especially Well When Travel Bounces Back

Daily Brief: Companies Like Airbnb Could Do Especially Well When Travel Bounces Back

about 3 years ago3 mins

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Airbnb reported better-than-expected quarterly results late last week, after everyone ventured off the beaten track to take their Zoom meetings from the middle of nowhere.

What does this mean?

Globetrotting might still be on hold, but there have been plenty of itchy-footed workers taking advantage of their newfound WFH freedom by booking long stays in remote locations. And that’s been a relief for Airbnb, whose sales fell 22% last quarter from the same time the year before – not ideal, sure, but far better than analysts were expecting. That drop-off was also a big improvement on Expedia and Booking.com’s respective 67% and 63% declines, possibly because they rely more on out-of-favor business travel and traditional hotels.

Quarterly revenue decline

Airbnb’s feeling surprisingly positive about the future too: the company’s preparing for a big travel rebound even if it can’t say exactly when it’ll happen, and investors – impressed by its can-do attitude – sent its stock higher.

Airbnb grabs bigger share of US lodging market in pandemic

Why should I care?

For markets: If in doubt, invest fancy.

That same expectation might be one of the reasons global hotel and leisure stocks hit all-time highs last week. Cue Soho House, which is reportedly polishing its finest monocle and reviving plans to make its stock market debut. The private members’ club reckons investors’ appetite for leisure stocks could bump its value to $3 billion – up from the $2 billion it was on just last year.

Zooming out: Food delivery’s running out of road.

It’s a different post-pandemic story for DoorDash, whose shares dropped late last week after the food delivery service reported better-than-expected sales. That might be because investors are wary that its worst enemy – dining out, shudder – might make a comeback. Then again, the fact more and more regions are capping the fees it can charge restaurants probably didn’t help much, nor did the benefits it’s now being told to pay its drivers – both of which could hurt its bottom line.

DoorDash quarterly net income
Source: The Wall Street Journal

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Morgan Stanley: Sustainable Funds Outperformed Traditional Funds Last Year

Morgan Stanley image

Now this is something we could get used to: new analysis by Morgan Stanley showed US sustainable funds outperformed traditional funds last year.

What does this mean?

Investing in doing good is more popular than ever, with investors pouring $21 billion into US sustainable funds – those focused on environment, social, and governance (ESG) factors – last quarter alone. That’s more than double the previous quarterly record set in 2019. And it doesn’t look like it’s at the expense of big gains either: Morgan Stanley’s study of 3,000 US sustainable equity funds showed they outperformed their traditional rivals by 4% in 2020. They suffered lower drops in aggregate during market downturns too, suggesting they were safer investments in 2020 – and since all the above findings held true across a longer timeframe, they potentially still are.

Sustainable funds annual flows and assets

Why should I care?

Zooming in: Sustainable funds are green, not black and white.

Thing is, it’s hard to say for sure what’s driving the performance of these funds. Morgan Stanley’s study found that sustainable funds on average held more growth stocks – think fast-growing tech companies – than their non-ESG peers. And given that those stocks have done well over the last years, it could be that they’re more responsible for the outperformance than the whole “sustainability” thing is.

2020 Median Total Returns
Source: Morgan Stanley

The bigger picture: Sustainable investing has room to grow in the States.

Sustainable investing might’ve reached new heights in the US, but the country’s still a long way behind Europe. European sustainable funds were managing $1 trillion by the end of last year, compared to $180 billion in the US and just $40 billion in Asia. Still, American funds might be about to get another boost: the country’s new green-minded president is planning to lift curbs on the country’s pension funds from investing based on ESG factors.

Annual European sustainable funds assets


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