ABNB (Long) - end of the choppiness?

Feb 12

Looking at my past track record, I am becoming somewhat of a fanless guru hahah - I better knock on some wood; otherwise the market goods give me a losing streak like I have never seen. However, it is nice to see how these age-old rules coupled with some patience work. Anyways, enough of bragging and lets get to the trade

Fundamentals

• The market is disgustingly overbought, so this trade is on only if the ABNB earnings deliver
  
• Overall, right now, I would only purchase stocks that have already posted blockbuster earnings, otherwise I am in expectations of a pullback that should last at least a couple of weeks (c. 2-4)
  
• Considering how ridiculous are some valuations getting in the market, ABNB is actually priced quiet reasonably, almost conservatively
  
• The company is pretty much printing money with a net profit margin of 58% (up from 20% a year ago) ,which is, honestly, incredible, hence the P/E of 'only' 18
  
• The earnings have grown by 253% yoy, and the revenue is steadily marching higher
  
• The firm is not bending under a pile of debt with a Debt/Equity ratio of 0.2 - so, no interest burdens
  

Technicals

• Given that Airbnb is a famous and popular brand, it is almost shocking how badly the stock has been performing since the IPO, having moved basically nowhere
  
• However, the chart has been putting in the work to build us a nicer a picture (an accumulating base) and we are nearing something that could potentially be a marvellous breakout, which is not incidentally coinciding with upcoming earnings
  
• Throughout this whole period, the stock has been gradually being accumulated with almost no major distribution periods (check the indicator)
  
• Indicators like MACD and Stochastics showing strong momentum

Trade

• This part is a bit tricky - if the earnings disappoint, then the trade is probably off because the setup goes to sh**; if the stock shows strong earnings than we can probably expect a major pop, which means we will have to be chasing
  
• But if you backtest strong earnings, you can see that it is worth chasing even a major earnings pop - the price tends to carry on performing strongly (e.g. ARM , PLTR etc. - from some of the recent examples)
  
• 'Meeting estimates' results that would barely move the stock is probably good, but I would wait a bit for more stock price action
  
• If the stock pops, but there is no follow through - is usually a bad signal and should be watched out for
  

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