Season 6, Post 31: Silly season, serious spending
Is the economy slowing? This Blog has never been a forum for discussing macro dynamics (read our monthly View From The Top instead). However, it probably won’t have escaped most readers’ attention that the stock market has concerned itself a lot with this topic in the past week or so. Sure, with many at the beach, trading volumes are markedly lower, exacerbating market moves and corresponding jitters. We will not attempt to answer the initial question but provide a few, slightly tongue-in-cheek, perspectives below.
The Paris Olympics ended on Sunday. By most accounts it was a marked success. It certainly should have been a boon for Airbnb. The company has estimated that nearly 400,000 guests stayed in properties listed on their platform over the event – that’s equivalent to filling five Olympic stadiums. We have made the case for platform business models that link disparate buyers and sellers since 2016 and believe there is significant runway still ahead, particularly as businesses such as Airbnb integrate AI more widely. Imagine a virtual concierge notionally able to fulfil your every need as a guest to a new city.
Summer is not only a good time for vacations, but also apparently for romance. Late last month, Match Group (owner of the Tinder and Hinge apps) hosted its regular quarterly earnings call for the investment community. During the event, it mentioned that downloads and usage of its services tended to peak in the third quarter of the year. Think not only summer flings but also the opportunities presented by the imminent back-to-school season, fresh starts and new classes.
Many, however, may prefer the company of animals to other humans. The pet economy received a massive boost during the pandemic, but we believe that there remains a significant long tail opportunity. As we first discussed in mid-2021 – not long after your author added a puppy to his household – more disposable income available to spend on pets combined with longer animal lifespans implies increased Dollar spend. Pet owners have many options, but one that is unlikely to pique the interest of many, we think, is a just-launched Dolce & Gabbana perfume for dogs. At a mere €99 per bottle, not only can users benefit from the “warm notes” of ylang ylang, musk and sandalwood, but also appreciate its container, which has a 24-carat gold-plated paw embedded on it. Even without such perfumed luxuries for pooches, the industry should still be experiencing 7% growth by decade-end.
13 August 2024
The above does not constitute investment advice and is the sole opinion of the author at the time of publication. Heptagon Capital is an investor in Airbnb and Match Group. The author of this piece has no personal direct investment in either business. Past performance is no guide to future performance and the value of investments and income from them can fall as well as rise.
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Alex Gunz, Fund Manager
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