Airbnb (ABNB 0.68%) and Lyft (LYFT 1.61%) both disrupted mature markets with their streamlined services. Airbnb challenged hotels with its short-term rentals, and Lyft challenged taxis with its ride-hailing app.
Inflation, rising interest rates, and other macro headwinds have kept the bulls away from both growth stocks. But over the past 12 months, Airbnb's stock price only declined 10% as Lyft's stock crashed by nearly 60%.
Let's see why Airbnb withstood the market downturn better than Lyft, and if it will remain the more resilient growth stock over the next few quarters.
Image source: Getty Images.
Airbnb offers inflation-resistant growth
Airbnb's revenue fell 30% in 2020 as the pandemic disrupted global travel, but surged 77% to $6 billion in 2021 as those headwinds waned. Its guests booked 300.6 million nights and experiences last year, up 56% from 2020, as its gross booking value (GBV) soared 96% to $46.9 billion.
That growth continued in the first quarter of 2022: Its revenue increased 70% year over year to $1.5 billion, its booked nights and experiences rose 59% to 102.1 million, and its GBV grew 67% to $17.2 billion. It expects its revenue to grow 56%-64% in the second quarter, even as the Russo-Ukrainian war disrupts travel across parts of Europe.
Airbnb can maintain such a rosy forecast because its business model is well-insulated from inflation. It won't need to deal with any rising commodity costs, budget-conscious travelers will likely select cheaper Airbnb rentals instead of pricier hotels, and economic headwinds could prompt its hosts to rent out additional properties to generate more passive income.
Airbnb's profitability is also improving. Its net loss narrowed from $4.6 billion in 2020 to $352 million in 2021, and it narrowed to just $19 million in the first quarter of 2022. Its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) improved from a negative $251 million in 2020 to a positive $1.6 billion in 2021, and it generated a positive adjusted EBITDA of $229 million in the first quarter of 2022.
For the full year. analysts expect Airbnb's revenue and adjusted EBITDA to increase by 38% and 50%, respectively, with a net profit of $1.2 billion.
Lyft faces more inflation-related headwinds
Lyft's revenue declined 35% in 2020 as passengers booked fewer rides during the pandemic. However, its revenue rose 36% to $2.4 billion in 2021 as the lockdown measures were relaxed.
In the first quarter of 2022, Lyft's revenue increased 44% year over year to $876 million. Its number of active riders rose 32% to 17.8 million, and its average revenue per rider grew 9% to $49.18.
Lyft's profitability has also been improving. Its net loss narrowed from $1.8 billion in 2020 to $1 billion in 2021, then narrowed again to $197 million in the first quarter of 2022. Its adjusted EBITDA improved from a negative $755 million in 2020 to a positive $93 million in 2021 and stayed in the black with a positive adjusted EBITDA of $55 million in the first quarter of 2022.
Lyft expects its revenue to grow 24%-31% year over year in the second quarter, but for its adjusted EBITDA to decline 16%-58%. That abrupt earnings decline can be attributed to higher fuel costs, which prompted it to add a new fuel surcharge in the first quarter, and its plans to raise its wages to attract more drivers to the platform. In other words, Lyft is much more exposed to inflationary headwinds than Airbnb.
For the full year, analysts expect Lyft's revenue to rise 33%, and for its adjusted EBITDA to jump 155% to $237 million, with a narrower net loss of $721 million.
But those forecasts are likely too high since Lyft's guidance for an adjusted EBITDA decline in the second quarter broadly missed analysts' expectations for 249% year-over-year growth.
The obvious winner: Airbnb
Airbnb trades at 11 times this year's sales, while Lyft trades at less than two times this year's sales. However, Airbnb commands a slight premium because it's one of the few growth stocks that are still worth owning as inflation and rising interest rates rattle the market.
The same can't be said about Lyft, which deserves to trade at a discount because it will face significant macro headwinds this year. It also doesn't have much room to raise its prices to offset its higher spending, since it still faces intense competition from its larger rival Uber.
Airbnb's stock might remain volatile over the next few months, but it's still a solid long-term investment in this challenging market.
