Airbnb Shares: My Top Stock to Buy Now

As consumers shift their purchasing toward experiences, this company is in a fantastic position to grow.
airbnb ipo price, airbnb stock, Airbnb Shares: My Top Stock to Buy Now

Airbnb (ABNB 1.11 percent) is currently my best stock to buy, and second place is not even close. The global travel agency is prospering as consumers release pent-up desire after being stuck at home for more than a year. To make the case even stronger, Airbnb's stock is perhaps cheaper than it has ever been following the overall stock market sell-off

Airbnb's free cash flow is increasing.

Airbnb struggled at the start of the pandemic as people postponed holidays. In 2020, revenue is expected to fall by 30%. Management used that opportunity to restructure the company and focus more on its core competencies. Because of these changes, the company has been able to make more money because sales are now higher than they were before the pandemic.

The company's revenue in the most recent quarter, which ended March 31, was 80 percent greater than in the equivalent quarter prior to the outbreak. Airbnb has accomplished this accomplishment despite the fact that global spending on hotels and resorts has not yet been restored to pre-pandemic levels. As a result, Airbnb is gaining popularity among people seeking to take long-delayed holidays.

In the third quarter, free cash flow totaled $1.2 billion. This was nearly double the $611 million earned in the previous year's comparable quarter. The asset-light business model of the organization aids in cash flow creation. Airbnb does not own any of the listings on its marketplace. Instead, it takes a percentage of all Airbnb transactions. As a result, it does not need to invest heavily in the construction of hotels and resorts.

Airbnb also attracts a diverse range of property types. People can, for example, reserve an extra bedroom in an apartment or an entire property. The variety of ads enhances the likelihood that passengers will find what they are looking for.

Airbnb's stock is at an all-time low.

Airbnb has a price-to-free-cash-flow ratio of 21. That measure indicates that the stock has never been cheaper. The discount valuation contradicts Airbnb's good prospects in the short and long run. It is in an excellent position to capitalize on consumers' pent-up demand for travel. Because of the asset-light business strategy, it can capture the full measure of demand growth. In contrast, hotels can only derive revenue from available rooms. That's it after they've sold out.

That is not an issue for Airbnb. According to management, increased demand drives more postings on the marketplace. People start bragging about how much money they make renting out their spare room or vacation house, and it doesn't take long for their friends and relatives to convert that spare space into an Airbnb listing.

A low valuation, increasing cash flow, and the release of pent-up travel demand all contribute to Airbnb's being my favorite stock to purchase right now.

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