Since peaking in mid-November, the Nasdaq Composite has been in a tailspin. The growth-heavy index has spent the better part of the last two months in correction territory, and it even dipped into bear market territory in March. As a result, many investors have seen their portfolios take a big hit.
Unfortunately, that's the price of admission for participating in the stock market. Downturns are going to happen. But there is a silver lining: Every past downturn has ended with the market hitting a new high, and there is no reason to think this situation is any different.
In the meantime, Airbnb (ABNB 0.59%) and Intuit (INTU 1.52%) have seen their share prices drop 21% and 34%, respectively. I think that creates a buying opportunity for long-term investors. Here's why.
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1. Airbnb
Airbnb has revolutionized the travel industry. Its marketplace-style platform connects millions of hosts with potential guests, helping people find a place to stay in thousands of cities around the world. By crowdsourcing inventory, Airbnb operates a far more agile business than traditional hotels. It can onboard new hosts in minutes without spending much money, but the average hotel costs $22 million to build and can take up to three years to complete.
Expanding on that idea, Airbnb's asset-light business model allows it to respond more quickly to changes in consumer travel preferences. For instance, more people are visiting rural areas, as non-urban nights booked rose 45% in 2021 compared to pre-pandemic demand. At the same time, Airbnb saw non-urban listings jump 20% last year, meaning supply is following demand. No hotel chain could react that quickly, and even if they could, it may not be profitable to build a hotel in a rural location.
Fueled by that competitive edge, Airbnb delivered impressive financial results last year. Revenue soared 77% to $6 billion, and it posted positive free cash flow of $2.2 billion, up from a loss of $667 million in the prior year. Additionally, Airbnb showcased its pricing power, as average daily rates rose 20% in the fourth quarter, driven by the recovery of travel in North America. Better yet, gross booking value soared 96% to $46.9 billion, implying strong future revenue growth.
On that note, with COVID-19 cases trending downward, Airbnb should benefit as the travel and tourism industry continues to recover. While their metric "nights and experiences booked" was still down 3% in Q4 2021 compared to Q4 2019, management expects that figure to surpass pre-pandemic levels for the first time in the first quarter of 2022. That's why this growth stock looks like a long-term winner, and with shares trading at 17.3 times sales -- below their historical average of 23.2 times sales -- now looks like a good time to take a stake in this disruptive company.
2. Intuit
Each year, millions of Americans use Intuit's TurboTax platform to file their taxes. It's becoming more popular each year. Intuit captured a 73% market share in consumer tax preparation software in 2021, up 10 percentage points from 2019. But while TurboTax may be its most recognizable brand, Intuit's QuickBooks platform is equally dominant, with 77% of the U.S. market share in accounting software.
That dominance has fueled an impressive financial performance. In fact, Intuit's revenue growth is accelerating. In fiscal 2021 (ended July 31, 2021), the company's top line jumped 25%, up from 13% in fiscal 2020. But over the last 12 months, revenue soared 48% to $11.4 billion, fueled by solid results across all business segments, and free cash flow rose 24% to $3 billion. Better yet, Intuit is well positioned to maintain that momentum.
Management puts its market opportunity at $260 billion. TurboTax and QuickBooks account for $64 billion of that total, Credit Karma and value-added QuickBooks products (e.g., payroll, payment processing) account for $166 billion, and international expansion accounts for the remaining $30 billion. To execute on that opportunity, Intuit recently completed its acquisition of Mailchimp, a company that provides commerce and marketing tools for small and medium-sized businesses, helping merchants build and grow their brand online. Those solutions complement Intuit's QuickBooks ecosystem, and the acquisition could supercharge its growth.
Additionally, Intuit has integrated Credit Karma with TurboTax and QuickBooks, allowing users to deposit tax refunds and paychecks directly into Credit Karma Money accounts. That synergy also works in reverse. With 41 million monthly active users, Credit Karma could also bring more customers to TurboTax and QuickBooks -- management believes its user base will reach 200 million by 2025, roughly double the 102 million users in 2021.
In short, Intuit has a strong competitive position, a massive market opportunity, and management is working on a smart growth strategy. With shares trading at 11.3 times sales -- cheaper than their three-year average of 12.3 times sales -- now looks like a good time to add this growth stock to your portfolio.
