These 2 Growth Stocks Have a Feature Warren Buffett Loves
One characteristic that Roblox (NYSE: RBLX) and Airbnb (NASDAQ: ABNB) have in common is that they both generate "float." In other words, each collects money from customers weeks or months before it provides services. This is one of Warren Buffett's favorite traits in a business.
That could be for a few reasons. For instance, getting money in advance of performing services allows a business to invest in low-risk bonds that earn money it gets to keep.
Another benefit is that it lowers the risk of doing business. It's less risky to collect money upfront and then spend it to perform services or create products. The alternative would be to spend money to create a product or service that might not find a buyer. Or, if it is sold with payment coming at the end of a service, there is always the small possibility a customer will default on the payment.
Source Fool.com
