It’s not always easy to be a long-term investor even though staying in the market has proven time and time again to be the best way to maximize one’s performance. Still, no investment is without risk, and putting your capital to work and leaving it in — even when prolonged periods of volatility disrupt your returns — can certainly be a lesson in fortitude.
Whether or not the market experiences a prolonged bull run in 2023, here are two businesses on solid long-term growth trajectories that look poised to produce wins for investors in the years to come. Let’s take a closer look.
1. Fiverr
Fiverr (FVRR) is one of the leading platforms for freelancers to connect with clients around the world to perform services ranging from copywriting to voiceover work to contract preparation to transcription and beyond.
The gig economy is growing at such a rapid clip that it’s estimated that this space will reach a valuation just shy of $1 trillion by the end of the decade. While the pandemic certainly accelerated the growth of the gig economy as more people looked for flexible ways to earn money on their terms and in the location of their choice, this growth story has long been underway.
Moreover, in an environment where concerns about a recession remain high, more and more workers are looking to freelance part-time or full-time to supplement or replace their income. As for the companies hiring these freelancers, procuring contract workers is a particularly attractive route in a range of environments, including a potential recession, as doing so doesn’t generally incur the same recurring or overhead costs that hiring full-fledged employees does.
Fiverr saw its total revenue grow 13% in 2022, reaching $337 million. At the end of the year, the platform hit a new record of 600 different freelance gig categories offered on its platform. Active buyers hit a whopping 4.3 million in 2022, up 1% from 2021 but up 80% compared to 2019, before the pandemic. And active spending per buyer jumped 8% year over year in 2022.
Even as businesses are moderating spending levels given the current macro situation, Fiverr reported that its cohort of buyers who spend more than $500 annually comprised 63% of its core marketplace revenue in 2022, while the cohort of buyers who spend more than $10,000 on Fiverr annually jumped 30% from 2021.
While businesses may scale back spending, even on freelance services, in the event of a recession, this strong foundation of growth bodes well for Fiverr’s story over the long-term. Its current valuation may compel the astute investor to take a second look.
2. Airbnb
Airbnb (ABNB) has changed the way that many people view their options for travel. Whether you want to stay in a Swiss chalet, a cabin in rural North America, or your very own Tuscan castle, the diversity of options tailored to every type of travel need that are available in Airbnb are what make its platform so intriguing to travelers. From long-term apartment-like stays to boutique hotel experiences, Airbnb has it all, whether you’re a tourist or a business traveler, or like to blend a bit of work and travel together.
Airbnb is one of the few travel stocks I follow closely, and this largely goes back to the stickiness of its underlying business model. The company caters to both sides of the multi-trillion-dollar travel industry — both supply and demand. Not only are travelers flocking to Airbnb’s platform to book stays even as concerns about a recession rage on, but a record number of people are listing stays to host on the platform as a means of earning additional income.
This duality of Airbnb’s platform not only makes its business model more compelling than the average travel stock, but it also lends a certain measure of resilience that other travel-facing companies may lack if the economy takes a further dip.
In fact, it appears that more people are looking to host as a means of hedging their financial position if a full-fledged recession comes, a trend that management has noted was previously apparent in The Great Recession. And in a day and age where the profile of the average traveler is changing amid the evolving world of work, there are plenty of catalysts that Airbnb can draw growth from, both now and in the long term.
As of the end of 2022, Airbnb had a record 6.6 million listings in its platform, up 16% from the year-ago period. Meanwhile, nights and experiences booked on Airbnb came to just shy of 394 million in 2022, up 31% from 2021 and 20% compared to the pre-pandemic year of 2019. This looks like a business with so much room left to run, and the cash and profits it’s raking in now could help it batten down the hatches if the economy takes another turn.
— Rachel Warren
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Source: The Motley Fool