Airbnb (ABNB 1.82%) was devastated at the pandemic's onset. The worldwide travel facilitator experienced a sales drop as people were hesitant to leave their homes. Thankfully, several effective vaccines against COVID-19 have been developed, and billions of people have been vaccinated.
That's giving folks more confidence to take those vacations they put off during the first parts of the pandemic. Even though the pandemic's end is nowhere in sight, Airbnb's revenue has become more robust than ever. That's partly why Airbnb is my top stock to buy right now. Let's look closer at what I like about Airbnb as an investment.

Image source: Getty Images.
Airbnb has an asset-light business model
Interestingly, Airbnb does not own any properties listed on its platform. Instead, the listings are populated by hosts worldwide that have a room, apartment, home, or treehouse to rent (yes, treehouses are sometimes listed on Airbnb). I like two things about this business model. First, Airbnb does not undergo the risk and constraint of building expensive hotels or resorts to generate revenue. Second, it lowers Airbnb's fixed costs in maintaining properties.
The benefits of this business model are starting to bear fruit. Airbnb quickly rebounded from the devastations of the pandemic as hosts list more often when they observe increasing consumer demand at higher prices. Indeed, Airbnb's revenue surged 77.4% in 2021, after falling by 29.7% in 2020. The $6 billion in sales in 2021 was $1.2 billion higher than the pre-pandemic year of 2019.
Further, Airbnb's profits soared as revenue rebounded. Net income of $834 million in the third quarter ended Sept. 30 was more than three times higher than the $267 million it earned at the same quarter in 2019. In the seasonally slower fourth quarter, net income was $55 million, compared to a loss of $352 million in the same quarter in 2019.
If Airbnb followed the more traditional hotel or resort model of building and operating locations, a surge in revenue of 77% in one year is improbable, regardless of how strong consumer demand is. Eventually, all of the rooms get booked, and to grow revenue, it would need to build new locations, which could take months or years. For that reason, Airbnb's asset-light business model is supportive of rapid expansion.
Airbnb's performance looks even better when considering the magnitude of rebound in the hotel and resort industry. The market crashed in 2020 from 2019 to $610 billion from $1.47 trillion. The market rebounded to $950 billion in 2021 but is still far from full recovery. Meanwhile, Airbnb's revenue in 2021 was 25% higher than it was in 2019. In other words, Airbnb is gaining market share.
Airbnb has excellent prospects at an inexpensive valuation
Fortunately for investors, despite all its excellent prospects, Airbnb is selling at its lowest price-to-free-cash-flow ratio in its young history as a public company. At 43, it's down from a peak of over 240 in early 2021.
With an asset-light business model, soaring profits, growing market share, and an inexpensive valuation, it's no surprise why Airbnb is my highest conviction stock to buy right now.