The stock market is risky, but certain companies have great business traits that might yield high returns if you don't anticipate results immediately. Such companies frequently lead their industry, have competitive advantages, and have strong development prospects.
Take Airbnb (NASDAQ: ABNB) and MercadoLibre (NASDAQ: MELI). For people having $2,000 to spare (not saved for bills or emergencies), investing in these companies makes sense.
1. Airbnb People love to travel. The hospitality industry—travel, lodging, and activities—is worth tens of billions. Airbnb offers house rentals and activities to simplify travel. The corporation dominates this niche. Airbnb has recovered well from the pandemic and has had strong financial outcomes.
Airbnb's $9.9 billion revenue rose 18% last year. Importantly, it was 106% higher than 2019 revenue, indicating that the company's business is well above pre-pandemic levels. Airbnb increased its net income to $4.8 billion last year, and its profit margin was 48.5%.
Airbnb, which pairs hosts with clients rather than owning and operating rental units, boosts its margins and bottom line. Other improvements included an 11.8% rise in free cash flow to $3.8 billion. Airbnb has yet to peak. The company's expansion into underserved markets offers many growth potential.
Airbnb earned 83% of its income last year from North America and EMEA. It has plenty of white space in Latin America and Asia, where it's pushing. Airbnb should also benefit from travel sector expansion, especially in established markets. In North America, Airbnb's biggest market, revenue is rising.
Despite regulatory changes in some countries, Airbnb's global prospects remain immense, especially due to the network effect. As hosts and activities expand on the platform, potential consumers become more interested, and vice versa. It added 1.2 million active listings last year. Airbnb should generate high long-term profits due to its growing ecology and potential. Investors can buy 12 company shares for $2,000.
2.LibreMarket Like Amazon, MercadoLibre is Latin America's largest e-commerce platform, but it's much more. Merchants can use its payment platform, shipping, and logistical services.
The company's extensive services make switching expensive. Customers would have to work hard to switch to a competition. In contrast, its major e-commerce site has a "network effect" that encourages merchants to join and vice versa as users buy more.
That's not to mention the cost of developing a logistics operation that can transport to various Latin American nations to challenge MercadoLibre. It'd be difficult. Despite its market dominance, MercadoLibre doesn't always please investors. The company's latest quarterly report disappointed.
MercadoLibre's 2023 fourth-quarter net revenue rose 42% to $4.3 billion, but net income stayed at $165 million. That was a one-time tax liability expense that won't effect MercadoLibre again. The e-commerce specialist had several strengths, with key metrics rising.
Active users rose 49.5% to 145 million, gross sales volume rose over 40% to $13.5 billion, and total payment volume rose 57.2% to $56.5 billion from the fourth quarter of 2022. For long-term investors, MercadoLibre's post-earnings drop was unwarranted. One of the fastest-growing marketplaces in the world is Latin America, where e-commerce is expected to increase.
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