Although the ongoing market downturn has affected companies of all stripes, it has particularly impacted growth stocks. That's not great news for investors, but the silver lining is that these businesses won't stay down forever.

Take vacation rental platform Airbnb (ABNB -3.18%), which has lost nearly half its value in the past year. There are good reasons to think the market is undervaluing Airbnb's potential, making it an excellent stock to buy right now. Let's dig a bit deeper.

ABNB Chart

ABNB data by YCharts

Airbnb's recent financial results

Airbnb's business struggled mightily amid the early days of pandemic. Offering vacation rentals when people barely want to leave their houses for fear of catching a potentially deadly infectious disease is not a great position to be in. On top of that, government-imposed lockdowns further limited people's movements.

However, Airbnb's operations have managed to rebound as people have ventured out again. In the third quarter, revenue jumped 29% year over year to $2.9 billion on the back of a 25% increase in nights and experiences booked, which came in at 99.7 million for the period. The company reported net income of $1.2 billion for the quarter, equating to 46% growth and marking its most profitable quarter ever.

Airbnb's performance was especially impressive, considering the difficult economic environment. Consumers have decreased their spending because of inflation, and many are directing funds primarily toward essential goods and services. Geopolitical tensions are also having an impact; Airbnb suspended its operations in Russia and Belarus earlier this year.

Furthermore, a strengthening U.S. dollar took a significant bite out of Airbnb's growth rates. For instance, the company's net income increased by an even more impressive 61% year over year on a constant currency basis. Airbnb's ability to deliver solid results despite all these challenges is commendable.

Built to last

Airbnb's most recent financial results were a continuation of what the company has shown over the past few quarters. But despite its strong earnings, the shares have continued to fall. That's partly related to Airbnb's valuation, which had been quite high. But at its current price-to-sales ratio of 8.7, the stock looks much cheaper than it was about a year ago.

ABNB PS Ratio Chart

ABNB PS Ratio data by YCharts

For context, the S&P 500's trailing-12-month P/S ratio was 2.3 as of July, which still makes Airbnb's shares pricey in comparison. But in my view, Airbnb is worth a premium given its solid competitive advantage and growth prospects.

Consider the company's network effects. Guests looking for vacation rentals in cities worldwide will be increasingly attracted to its platform as the number of hosts increases. Conversely, the more guests there are on the platform, the more renters they will attract. Airbnb reports that the number of hosts it partners with keeps growing, with more than 4 million as of the third quarter.

Airbnb's gross booking value -- the total dollar value of all bookings on its platform -- is also trending up. During Q3, this metric jumped by 31% year over year to $15.6 billion, providing solid evidence of more activity from hosts. And there is plenty of room for more growth. The hotel and resort industry was worth $1.52 trillion in 2019. That figure dropped precipitously during the depths of the pandemic and has yet to recover fully.

Airbnb competes with hotels and offers perks that they don't, including privacy, amenities, a more "homey" environment, and lower prices. These factors make its rentals more suited for long-term stays, and this category remains one of the company's fastest-growing. In the third quarter, stays of at least 28 days accounted for 20% of Airbnb's gross nights booked. Longer stays fit well in a post-pandemic world where more people are working remotely and can travel while doing so. That should help fuel Airbnb's growth.

Overall, the company sees an addressable market worth $3.4 trillion. It has barely scratched the surface of this opportunity, and even with stiff competition, there is more than enough room for multiple winners. Airbnb can deliver outsize gains to investors patient enough to hold its shares through the current downturn, making it an excellent tech stock to buy -- especially while it's down.