If I Could Buy Only 1 Stock in This Nasdaq Bear Market, This Would Be It

The stock market has taken investors on a roller coaster ride. Sharp up and down movements in the market follow the constant announcements from the Trump administration about tariffs, with the S&P 500 up over 10% on Wednesday and down 3.5% on Thursday. The S&P 500 never officially entered a bear market, but the Nasdaq 100 did. Shares of the index of technology and large-cap growth companies fell over 20% in the last few weeks before bouncing back by 12.2% on Wednesday, only to fall 4.3% on Thursday.

Looking at historical records, the largest up days do happen during bear markets. None of us know whether the bear market in Nasdaq stocks will continue. What we can do is prepare our watch list, act rationally, and have a plan ready if stocks fall further. There are plenty of high-quality companies to buy if the market keeps falling.

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And I have my eye on one stock above all others: Airbnb (NASDAQ: ABNB). Because of its conservative balance sheet and long-term potential, the online marketplace for homestays and travel experiences is the stock I would buy if I had just one choice during this bear market.

A globally diversified travel network

Investors are worried about overall consumer demand in the U.S. and China because of drastically high tariffs each country is inflicting on the other. Airbnb will be more insulated than most other companies when dealing with this issue. For one, as an online marketplace, it does not have a supply chain. Second, it does not operate in China.

North America accounted for 46% of its gross booking value in 2024. However, this declined over time, with major growth coming from Europe, Latin America, and Asia in 2024.

Management believes there is plenty of room to keep growing outside of North America with its geographical expansion strategy. It has underserved markets such as Japan, Germany, and Brazil compared to its online competitors.

Over the next few years, this worldwide expansion should help Airbnb to keep increasing sales by a double-digit rate after total revenue in 2024 was $81.8 billion, up 12% year over year.

This global-focused strategy will give it a more robust business and less concentration in North America, insulating it from tariff volatility.

Betting on adjacent services

Another growth avenue for the company will be adding new services to its travel portal. Historically, Airbnb has almost solely focused on perfecting its home-sharing model that it invented in 2007. Now, management has said it will release new features in 2025. Details are being kept under wraps, but we can expect to learn more throughout 2025.

We can speculate that these will likely serve both its hosts and guests. The latter might be able to book local tours, airline tickets, or even trip packages. Hosts might be able to obtain housecleaning teams or other services to increase the value of listing their dwellings on the company's marketplace.

Whatever the details, Airbnb has tens of millions of people who use its platform every year, giving it a vast audience for any new services it adds.

ABNB Net Income (TTM) data by YCharts; TTM = trailing 12 months.

Why Airbnb is a cheap stock in this bear market

After Thursday's trading, Airbnb has a market cap of $71.8 billion. Excluding cash held on behalf of customers, the company has over $10 billion on its balance sheet. Including debt, its net cash position is around $8 billion. Subtract this from the market cap and you get an enterprise value of around $63.8 billion.

This looks expensive versus a figure of $2.65 billion in trailing net income. However, Airbnb has a chance to greatly grow its earnings power in the next five years with durable revenue growth and margin expansion with the strong unit economics of its online marketplace. The company is investing aggressively to increase its services and expand in new countries. Once these scale up, profit margins should begin to rise.

If the company can bring its revenue from $11.2 billion in 2024 to $20 billion in 2030, I think a net income margin of 30% is well within reach. Don't forget that the company earns net interest income on customer deposits, too. A 30% margin on $20 billion in revenue equates to $6 billion in net income, or close to just 10 times its current enterprise value. From my seat, this looks like a dirt-cheap growth stock to add to your portfolio during this current Nasdaq drawdown.

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Brett Schafer 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.