Down 42%, Should You Buy This Top Growth Stock With $10,000 Right Now?

Key Points

• This company has come to dominate its industry in less than two decades, and management continues to focus on innovation and growth.

• A powerful brand coupled with a global network effect support the economic moat, adding durability to the business model.

• The market isn't asking investors to pay a steep valuation.

• 10 stocks we like better than Airbnb ›

On Sept. 18, the S&P Index closed at a fresh all-time high. The popular benchmark continues to march higher. While that's a good thing for investors, it might be a discouraging development for those searching to buy individual companies at a discount.

Even in this kind of market environment, there are still investment opportunities, like this growth stock that's trading 42% below its record high from February 2021. Should you buy shares with $10,000 right now?

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue »

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Leading the travel industry

From its founding 17 years ago to today, Airbnb (NASDAQ: ABNB) has become a $78 billion company (based on market cap) that dominates its industry. Growth has been the key driver of value. Revenue, gross booking value, and nights and experiences booked have soared over the years. The company currently has 5 million hosts and 10 million homes, showcasing its scale.

The growth has revealed just how profitable the business can be. Airbnb raked in $642 million in earnings during the second quarter, which translated to a strong net profit margin of 21%. This is a major improvement from the $576 million net loss posted in Q2 2020. The company also produces ample amounts of free cash flow.

Management has the confidence to keep pushing for more growth. Within the core rental operations, there is a big opportunity to further penetrate international markets, like Brazil, Japan, Germany, and India. Airbnb is also noticing that long-term stays, those that are for 28 days or more, are popular.

There are plans to become a comprehensive travel platform. Earlier this year, Airbnb introduced Services (like a personal chef, massage, or photographer) and Experiences (like a wine tasting, scenic hike, or yoga session), revamping its app in the process. "It's still early, but we believe that services and experiences can become sizable businesses for Airbnb," said co-founder and CEO Brian Chesky on the Q2 2025 earnings call.

These initiatives will require capital investments, to the tune of $200 million just this year, so investors shouldn't be surprised if margins decline. However, they certainly expand the company's total addressable market, even if they require patience from investors. Airbnb is putting itself in a position to drive more revenue from its guests over time.

Airbnb's economic moat

Airbnb is putting up solid financial results, and investors should have confidence that this type of performance will continue into the future. That's because the business has developed an economic moat that supports its staying power in the travel industry.

CFO Ellie Mertz said on the Q2 2025 earnings call that 90% of site traffic comes from "direct and unpaid" sources. In other words, Airbnb has built a powerful brand that people might immediately think of when they consider taking a trip. The company's name is also regularly used interchangeably as a verb, highlighting the mindshare it has commanded among consumers.

Airbnb also benefits from a network effect. It's a classic flywheel. More hosts with more listings provide travelers with more options, increasing the value the platform provides. And with more travelers searching on Airbnb for accommodations, hosts benefit by being able to target a larger audience. Even better, the network effect is global, not restricted to a specific city in the way ride-hailing services might be.

Time to buy the dip

Airbnb has underperformed the market in the past year, with shares up less than 3%. The market is rightfully worried about key risks, like the persistent threat of changing regulations in certain markets, with governments focused on supporting housing supply and cost of living within their borders. A possible recessionary scenario will also put a damper on growth, at least temporarily. These factors shouldn't be ignored, but Airbnb deserves the benefit of the doubt.

Shares trade at a forward price-to-earnings ratio of 25. Given the company's growth potential, high profits, and durable competitive strengths, Airbnb is worthy of a $10,000 investment right now.

Should you invest $1,000 in Airbnb right now?

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Neil Patel has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Airbnb. The Motley Fool has a disclosure policy.