Over the past few years, consumers have become more price conscious about many goods, but have continued to spend on services. Experiences such as travel and vacations have continued to thrive, and still look like strong trends.
However, consumers may potentially want to start looking for deals there. Companies that can cater to consumers looking for a deal may be able to see continued strength as this trend shifts towards bargain hunting.
For vacations, that could be a boon for Airbnb (ABNB). The company’s growth has been strong over the past few years, and new plans to drive innovation and customer experiences may allow for further gains.
Over the past year, Airbnb has managed to grow revenues by 12%, even as shares have taken a 20% haircut. Plus, the company is sitting on over $10 billion in cash, which provides them with sufficient liquidity to weather any storm in consumer spending.
Action to take: Investors may like shares as a speculative buy here. Airbnb shares are fairly valued at about 30 times earnings, and revenue growth needs to better translate into earnings growth to really see the stock take off.
For traders, shares are getting oversold after dropping from $160 to $130 during the recent market selloff, and a rebound looks likely in the weeks ahead.
The May $150 calls, last trading for about $3.55, could see mid-to-high double-digit returns on a bounce higher. Traders should look to take quick profits.
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.