Consumer spending makes up the bulk of the economy. Changing trading patterns are creating tremendous uncertainty, and there are signs that consumers are pulling back.
While the extent of the pullback is unknown, it won’t last forever. And when consumer sentiment does improve, consumers will want to spend more to make up for the reduced spending during uncertain times. As that happens, many out-of-favor opportunities could soar higher.
For instance, fears are mounting about a decline in travel and tourism spending. Airbnb (ABNB) noted in its most recent earnings some signs of a decline, although not a bad one.
However, shares have already pulled back 20% in the past year, reflecting that uncertainty.
In this uncertain environment, Airbnb could be better positioned than other hospitality plays like hotels. That’s because Airbnb is a platform that connects those looking for a place to stay with those who have a room or home to rent. They don’t have any buildings to own or maintain.
That keeps Airbnb’s profit margins high, about 23% right now. And revenues for the platform are up, even if growth has slid over the past year.
Action to take: Contrarian investors may like Airbnb here to benefit from a resolution to the current economic uncertainty.
For traders, shares are already trending higher off of 52-week lows. The July $145 calls, last trading for about $2.40, could see mid-to-high double-digit returns.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any company mentioned in this article.