It may seem counterintuitive to put money into stocks right now as the indices tumble and dip further into a bear market. But even with a massive sell-off underway, there are still plenty of great companies that have fantastic long-term prospects.
Two companies that could look like very smart places to have invested $1,000 when the market rebounds are Airbnb (ABNB -2.68%) and Roku (ROKU 2.37%). Here’s why.
Don’t get me wrong, hotels can be great. If you’re looking for a downtown hotel in the heart of a big city, they can be a great option. But for a unique traveling experience, they come up woefully short.
That’s what sets Airbnb apart from its short-stay competitors. Users turn to Airbnb for locations and experiences that are truly unique. Not only is it providing its users with stays and locations that hotels have a hard time matching, Airbnb is also experiencing tremendous growth that investors shouldn’t ignore.
For starters, consider that the company’s first-quarter total sales reached $1.5 billion, soaring 80% from the comparable quarter in 2019 (pre-pandemic quarterly comparisons are the most accurate comparisons because COVID-19 shut down most travel in 2020).
Second, the company’s nights and experiences booked have already exceeded their pre-pandemic levels, reaching 102 million in the first quarter.
Sure, inflation and a potential slowdown of the economy are things Airbnb investors need to keep an eye on. But the company has already proved that it can weather very difficult times and come out on the other end even stronger.
And with the company’s shares now trading below their IPO price, investors have been given a second chance to snatch up at a discount.
The recent tech stock sell-off has hit Roku’s stock hard lately, but the drop has everything to do with negative sentiment in the market rather than any problems with Roku’s business.
In the company’s most recent quarter, Roku’s active accounts popped 14% to an impressive 61.3 million. And in this case, active accounts really means active. Roku users streamed more than 21 billion hours in the quarter, a 14% jump year over year.
Even more impressive is the company’s average revenue per user (ARPU), which increased 34% from the year-ago quarter to $42.91.
Investors will want to watch any changes to Roku’s advertising revenue as a result of inflation and the economy, but most of the company’s sales come from its platform (subscriptions users sign up for while on the platform), which means Roku can still grow even if advertising release temporarily slows.
So let’s recap for just a second. Roku is growing its active user base at a healthy clip, those users are spending more time on the video-streaming platform than ever before, and Roku has significantly increased the amount of money it earns from them. What’s not to love?
With its share price now down 76% over the past 12 months, putting $1,000 into this stock now and patiently waiting for the market to rebound could end up being a very smart long-term play.