US stock markets have been selling recently. The Federal Reserve has begun to remove accommodative monetary policy and is indicating that it is related to the level of inflation. Additionally, geopolitical risks are rising as Russia’s invasion of Ukraine has raised the alarm.
The combination is troubling investors, causing them to sell stocks and seek safety in safer assets. This is precisely the environment in which I prefer to go for riskier assets purchases – when the market is in fear. i have a look Pinterest (Pinus 3.99%) and airbnb (ABNB -2.00%). Here’s a closer look at why I like each.
While the broader markets are experiencing a sell-off, Pinterest is going through a rough patch. Shares of the image-based social media site have fallen 71% in the past year. The company flourished at the start of the pandemic when millions were spending more time at home, and is now turning into a headwind as the economy reopens.
Even after dropping 45 million monthly active users (MAUs) over the past three quarters, Pinterest still has 431 million MAUs. That’s nearly 100 million more than at the end of the fourth quarter of 2019 before the outbreak. It has indeed been a dramatic rise and fall, but it is still far ahead of pre-pandemic levels.
Pinterest is free to join and use. The company earns money by showing advertisements. The global advertising industry generated $763 billion in revenue in 2021, a 22.5% increase over 2020. In 2021, Pinterest had $2.6 billion in revenue. There is scope for the company to take a bigger share of this growing industry.
Meanwhile, Pinterest trading at a forward price-to-earnings ratio of 22 in the sell-off and a price-to-free cash flow of 21 is a bargain for a company that grew revenue by 52% in 2021 and per share. Income up to 309%. Previously, I waited for Pinterest’s losses in MAU to reverse before considering a purchase. However, if sales continue, I may be adding a position to Pinterest soon.
Airbnb, the online marketplace for vacation rentals, is a stock I started selling about a month ago—and I love it even more now. Since then, Airbnb has reported quarterly earnings results, which showed continued momentum in the business.
Net income increased to $55 million in Q4, up from a loss of $352 million in the same quarter in 2019. Revenue grew to $1.5 billion, up 38% from the same quarter in 2019. This was encouraging due to the rising cases of coronavirus. By Omicron Editions. The stock rose after the earnings announcement but has fallen in recent weeks as part of a sell-off in the broader market.
This creates an opportunity for me to add to the position I started at almost the same price, despite evidence of better performance. Airbnb is addressing a market opportunity of approximately $1.5 trillion. Consumers have shown a preference for its service, and it continues to gain market share.
Since Airbnb does not need to make significant capital investments to increase its capacity, it can quickly adapt to market conditions without capital requirements. Trading at a price-to-free cash flow ratio of 44, which is the lowest sold in the past year. If Airbnb keeps falling apart amid the sell-off, I may have more ownership than ever.
This article represents the opinion of the author, who may disagree with the Motley Fool Premium Advisory Service’s “official” recommendation status. We are Motivate! Questioning an investment thesis — even our own — helps us all to think critically about investing and make decisions that help us become smart, happy, and wealthy.