Breaking News
Investing Pro 0
NEW! Get Actionable Insights with InvestingPro+ Try 7 Days Free

Uber Vs. Airbnb: Which Sharing Economy Giant Is A Better Bet Amid Recession Risks?

By Haris Anwar/Investing.comStock MarketsSep 20, 2022 01:43PM ET
www.investing.com/analysis/uber-vs-airbnb-which-sharing-economy-giant-is-a-better-bet-amid-recession-risks-200630079
Uber Vs. Airbnb: Which Sharing Economy Giant Is A Better Bet Amid Recession Risks?
By Haris Anwar/Investing.com   |  Sep 20, 2022 01:43PM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
 
UBER
+9.24%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
ABNB
+5.53%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
  • Uber and Airbnb face similar macroeconomic headwinds
  • But the pandemic shock has shown that their business models are resilient and can withstand a sudden drop in demand
  • Uber stock has rebounded sharply during the past three months, surging about 50% from its June low

Unless the economy takes a sharp turn for the better, the two modern-era technology disruptors, Uber Technologies (NYSE:UBER) and Airbnb (NASDAQ:ABNB), are poised to experience their first recession since becoming public companies.

The San Francisco cohabitants belong to a market segment that came into existence after the Global Financial Crisis of 2008. As such, they have not yet experienced challenges like the ones we currently face.

However, although investors are usually reluctant to hold tech companies in their portfolios when the sailing is rough, both global operators have emerged much stronger after the pandemic-driven shock to the economy.

Here is a deeper look into their recent business performance to analyze whether their stocks could prove bargains for long-term investors.

Uber Benefits From Diversification

CEO Dara Khosrowshahi’s key post-pandemic strategy has been to capitalize on the boom in delivery by expanding into other categories like convenience-store items, alcohol, and groceries, turning the Uber rides app into much more than just ride-sharing.

The San Francisco-based Uber’s latest earnings show that this strategy is paying off. Both revenue and gross bookings surged to a record high in the quarter ended on June 30.

Uber Eats revenue grew 25% from a year ago and is expected to keep doing so, as Khosrowshahi told analysts that a key focus for the remainder of this year would be increasing profitability in the delivery segment.

Uber stock has rebounded sharply during the past three months, surging about 55% from its June low. According to most analysts, this momentum will likely continue as the company moves closer to profitability.

Uber Weekly Chart
Uber Weekly Chart

In an Investing.com poll of 46 analysts, 41 rate UBER stock a buy, with a consensus price target implying a 48% upside.

Uber Consensus Estimates
Uber Consensus Estimates

Source: Investing.com

In a recent note, Wolfe reiterated Uber as a top pick, saying it sees a “significant runway for profitability” for the company. Bernstein also reiterated Uber as outperform, arguing that during a harsh economic environment, investors should stick with market leaders, such as Uber, that can emerge from this period as better businesses.

Airbnb Benefiting From Global Travel Rebound

The also San Francisco-based rental platform has developed a business model which is flexible enough to deal with the various economic challenges. The recent evidence of this adaptability came during the pandemic when travel demand suddenly plunged, casting doubts over a company’s future that went public during one of the biggest health crises of modern history.

But during those two years of upheaval, Airbnb not only managed to weather the pandemic but also thrived, achieving the best year in the company’s history in 2021.

The company quickly restructured its app to take advantage of a new world of travel due to the flexibility offered by new remote work policies that allowed people to spread out to thousands of towns and cities, staying for weeks, months, or even entire seasons at a time.

Long-term stays were the fastest growing category in the second quarter, gaining almost 90% from three years ago, suggesting some portion of the pandemic-related surge is here to stay, especially when a large pool of workers have choices to work from anywhere.

According to its latest earnings report, ABNB posted a 58% year-over-year jump in its sales in Q2 to $2.1 billion, helping to drive the company’s most profitable second quarter to date. Still, that growth was slower than it was last quarter, when revenue surged 70% over the first quarter of 2021.

ABNB Weekly Chart
ABNB Weekly Chart

As soaring prices and higher interest rates begin to curtail consumers’ spending power, travel demand could take a hit in the coming days when the post-pandemic desire to take the plane will decline.

That’s the main reason that most Wall Street analysts are not convinced that this is the right time to bet on Airbnb stock despite the company predicting a record third quarter in terms of gross bookings and sales. In an Investing.com poll of 39 analysts, only 16 rate the stock a buy.

ABNB Consensus Estimates
ABNB Consensus Estimates

Source: Investing.com

Bottom Line

Though I like both stocks for any long-term buy-and-hold portfolio, Uber’s diversified business model makes it much more resilient to weather an economic shock. While still strong, Airbnb is more prone to economic headwinds if travelers hold back on their discretionary spending. If you have to choose between the two, I recommend sticking with Uber.

Disclosure: The writer is long on both Uber and Airbnb.

Uber Vs. Airbnb: Which Sharing Economy Giant Is A Better Bet Amid Recession Risks?
 

Related Articles

Vince Martin
Micron Looks Like A Buy, But Not Yet By Vince Martin - Oct 04, 2022 14

So far, the market has shrugged off last week’s disappointing outlook from Micron The long view makes some sense, as Micron is an intensely cyclical company One key question:...

Uber Vs. Airbnb: Which Sharing Economy Giant Is A Better Bet Amid Recession Risks?

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (6)
Abdul Razack
Abdul Razack Sep 23, 2022 1:22AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
thank you
Varditer Melkonian
Varditer Melkonian Sep 21, 2022 5:49AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
varditer
Mithilesh Kumar
Mithilesh Kumar Sep 20, 2022 10:19PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Haris, would be good to know the level at which you went long and what would be your target/s. Thanks.
Billy Bilnaad
Billy Bilnaad Sep 20, 2022 6:34PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Uber, a potential future FANG stock.
Mohd Izhar Muslim
Mohd Izhar Muslim Sep 20, 2022 2:07PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Thank you for sharing the article 💯
Saleem Nasir
Saleem Nasir Sep 20, 2022 1:49PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
I agree
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email