Airbnb (ABNB -1.48%), the home-sharing disruptor, made a big splash on the stock market when it went public in 2020.

Like most growth stocks, Airbnb surged through 2021, but it's stumbled in 2022 even as the company has reported strong growth on the top and bottom lines. Year to date, the stock is down 42% as investors seem to be betting that the recovery in the travel market will soon fade as fears of a global recession rise.

However, even in a weakening macroeconomic climate, Airbnb looks like a smart stock to own. Here are three reasons why.

A pool at an Airbnb in Milan.

Image source: Aribnb.

1. It can gain market share in a recession

Airbnb's home-sharing marketplace business model offers a number of competitive advantages, but arguably the greatest is its flexibility.

In the early stages of the pandemic, Airbnb outperformed its hotel and online travel agency peers as travel demand shifted to rural locations and long-term stays as people looked to escape densely packed cities to ride out the lockdowns.

Unlike a hotel chain, Airbnb's inventory can quickly shift to respond to changing demand. That happened in 2020, and it seems to be happening again as much of the world is confronting a cost-of-living crisis. Airbnb said that in the third quarter, single-family listings jumped by 31% as people around the world turned to Airbnb for supplementary income.

That shows how the home-sharing platform can adapt to changes in demand based on price, location, and other factors, and that influx of single-room listings should provide an additional supply of low-priced options for budget-minded travelers during a potential recession.

2. Profitability should keep ramping higher

Airbnb's business model is highly scalable. By providing a tech platform for users to host travelers in their homes, the company monetizes the marketplace while hosts do the hard work of providing accommodations.

Some of the company's line-item expenses have to grow with booking volume, but the core of the business should gain leverage and increase profit margins as revenue grows. That played out in 2022 as profit margins surged, reaching 20% over the last four quarters, and the company guided for margins to expand in the fourth quarter as well.

The company also spends almost nothing on capital expenditures, showing the advantages of its platform business model. Through the first three quarters of the year, it's spent just $16.6 million in capital expenditures, but generated nearly $3 billion in operating cash flow, giving it free cash flow of $2.95 billion. 

From a base of $6.5 billion in revenue, that gives the company a free cash flow margin of more than 40% through the first three quarters of the year. The fourth quarter is its seasonally weakest in cash generation, but that figure nonetheless shows the company's ability to convert revenue into cash.

3. The stock is well-priced

Like the rest of the tech sector, Airbnb stock has fallen sharply this year, but the home-sharing leader is different from most of its tech and growth stock peers.

Unlike most of those stocks, Airbnb's business was negatively impacted by the pandemic, and the business has thrived this year in the reopening. So it's odd that the stock is down so much this year, and that seems to be more of a reflection of a broader market sentiment rather than Airbnb's fundamentals.

After profits surged this year, the stock now trades at a price-to-earnings ratio of just 40, which seems like a great price for a company growing quickly with a huge addressable market in front of it that it estimates at more than $1 trillion.

After a boom year in 2022, Airbnb's growth rate is likely to slow in 2023, but the company looks well-positioned to gain market share in 2023 and expand its profit margins. Investors would be wise to take advantage of the discount in the stock and buy this wide-moat travel disruptor.