Airbnb ( ABNB -3.27% ) and Uber Applied sciences ( UBER -1.75% ) each disrupted mature markets with their streamlined apps. Airbnb challenged motels by letting folks hire out their very own properties, whereas Uber challenged taxis by permitting almost anybody to develop into a paid driver. Uber Eats additionally grew to become one of many world’s largest meals supply providers.
Airbnb’s inventory value has dipped 7% over the previous 12 months, making it one of many market’s extra resilient progress shares, however Uber’s inventory has declined almost 50%. Let’s examine why Airbnb outperformed Uber by such a large margin, and if it is going to proceed to generate larger features for the foreseeable future.
Picture supply: Getty Pictures.
How did Airbnb resist the sell-off in progress shares?
Airbnb struggled throughout the pandemic as world journey floor to a halt, however its post-lockdown recoveries when it comes to gross reserving worth (GBV), whole nights and experiences booked, and whole income have been exceptional:
| Section | 2020 YOY Change | 2021 YOY Change |
|---|---|---|
| Gross reserving worth | (37%) | 96% |
| Nights and experiences | (41%) | 56% |
| Whole income | (30%) | 77% |
Information supply: Airbnb. YOY = year-over-year.
Analysts count on Airbnb’s income to rise 31% to $7.9 billion this yr as extra international locations finish their COVID-19 restrictions.
Its enterprise mannequin can be naturally proof against inflation for 2 easy causes: Price range-conscious vacationers will gravitate towards cheaper Airbnb lodging as an alternative of pricier motels, and property homeowners will hire out extra properties to generate extra passive earnings.
But it surely nonetheless faces different longer-term threats — together with tighter laws for short-term leases, competitors from cheaper lodge chains, and the expansion of short-term rental platforms backed by on-line journey companies. These potential threats have not dented its backside line but. Airbnb’s web loss narrowed from $4.6 billion in 2020 (together with $2.8 billion in stock-based compensation associated to its preliminary public providing) to only $352 million in 2021.
On an adjusted earnings earlier than curiosity, taxes, depreciation, and amortization (EBITDA) foundation, it posted its first annual revenue of $1.6 billion in 2021, in comparison with an adjusted EBITDA lack of $251 million in 2020. Analysts count on its adjusted EBITDA to rise 33% to $2.1 billion in 2022.
The resilience of Airbnb’s enterprise enabled it to climate the current downturn in most high-growth tech shares, which could be largely attributed to inflation, rising rates of interest, and different macroeconomic shocks.
Why did traders lose curiosity in Uber?
Uber’s progress trajectory initially appears much like Airbnb’s. Its progress slowed down considerably in 2020, as a giant bounce in Uber Eats orders did not offset its lack of Uber rides all through the pandemic. However that stability was restored in 2021 because the lockdown measures have been relaxed.
| Section | 2020 YOY Change | 2021 YOY Change |
|---|---|---|
| Journeys | (27%) | 27% |
| Gross bookings | (11%) | 56% |
| Whole income | (14%) | 57% |
Information supply: Uber. YOY = year-over-year.
Analysts count on Uber’s income to rise 55% to $27.1 billion in 2022 as its post-lockdown restoration continues.
Its web loss additionally narrowed from $6.8 billion in 2020 to only $496 million in 2021 because it lower prices, divested its weaker abroad items, and bought its unprofitable superior expertise group (ATG) enterprise, which had been primarily growing autonomous autos, to Aurora Innovation.
On an adjusted EBITDA foundation, its loss narrowed from $2.5 billion in 2020 to $774 million in 2021, and it even turned worthwhile by that measure in each the third and fourth quarters of the yr. Analysts count on it to put up a constructive adjusted EBITDA of $1.3 billion in 2022.
That outlook appears rosy, however Uber faces two main headwinds that do not have an effect on Airbnb. First, inflation poses a significant problem for Uber as gasoline prices rise. Uber lately added gasoline surcharges to cushion the blow for its drivers and couriers, however these greater costs might additionally alienate its clients.
Second, Uber faces ongoing calls to reclassify its drivers from impartial contractors to full-time workers. These calls for might acquire extra steam as inflation reduces the common spending energy of its contract staff.
The valuations and verdict
Airbnb trades at 14 instances this yr’s gross sales, which signifies traders are keen to pay a premium for its inflation-resistant enterprise. Uber trades at simply two instances this yr’s gross sales, which suggests traders aren’t bullish about its future as greater gasoline prices ripple by way of its total enterprise.
Uber may seem like the cheaper inventory, particularly after it obtained lower in half over the previous 12 months, however Airbnb is clearly the higher long-term funding. The power of its model, the simplicity of its enterprise mannequin, and its resistance to macro headwinds all make it an important inventory to purchase proper now.
This text represents the opinion of the author, who might disagree with the “official” suggestion place of a Motley Idiot premium advisory service. We’re motley! Questioning an investing thesis – even one in every of our personal – helps us all assume critically about investing and make selections that assist us develop into smarter, happier, and richer.
