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Food delivery was a rare place of major activity in a year shaped by the global pandemic, with stay-in-place orders helping fuel demand for at-home dining. Consolidation has been a major trend among these companies in an effort to capture additional market share and serve more geographies. With their latest earnings reports,
Uber Technologies Inc (NYSE: UBER) and
GrubHub Inc (NYSE: GRUB) showed that food deliveries are still going strong despite eased restrictions. This week,
DoorDash Inc (NYSE: DASH) is expected to also provide reassurance that this positive trend will last once customers are no longer homebound and restaurants have reopened.
Traditional valuation metrics indicate that home rental pioneer Airbnb (NASDAQ:ABNB) is a vastly overpriced stock with an unfavorable risk/reward profile. At about 17 times estimated revenue for this year, Airbnb isn t going to land on many value investors desks. The picture doesn t improve when the stock is stacked up against rivals in the online travel booking space, such as VRBO owner
Expedia, which is trading at less than four times expected sales.
For many, the valuation story ends there, with Airbnb s nose-bleed price-to-sales metric putting the stock well out of investors comfort zones. I believe this may be a monumental mistake, however, since common valuation measures fail to capture the long-term growth potential of a game-changing company like Airbnb.