Earlier this month, online vacation platform Airbnb (NASDAQ: ABNB) – and food delivery startup DoorDash (NYSE: DASH) went public with their stocks seeing big jumps from their IPO prices. Airbnb is currently valued at a whopping $90 billion, while DoorDash is valued at about $50 billion. So how do the two companies compare and which is likely the better pick for investors? Let’s take a look at the recent performance, valuation, and outlook for the two companies in more detail. Airbnb vs. DoorDash: Which Stock Should You Pick?
Covid-19 Helps DoorDash’s Numbers, Hurts Airbnb
Both Airbnb and DoorDash are essentially technology platforms that connect buyers and sellers of vacation rentals and food, respectively. Looking purely at the fundamentals in recent years, DoorDash looks like the more promising bet. While Airbnb trades at about 20x projected 2021 Revenue, DoorDash trades at just about 12.5x. DoorDash’s growth has also been stronger, with Revenue growth averaging about 200% per year between 2018 and 2020 as demand for takeout soared through the Covid-19 pandemic. Airbnb grew Revenue at an average rate of about 40% prior to the pandemic, with Revenue likely to drop this year and recover to close to 2019 levels in 2021. DoorDash is also likely to post positive Operating Margins this year (about 8%), as costs grow more slowly compared to its surging Revenues. While Airbnb’s Operating Margins stood at around break-even levels over the last two years, they will turn negative this year.
The Airbnb Story Still Has Appeal
However, we think the Airbnb story has more appeal compared to DoorDash, for a couple of reasons. Firstly in the near-term, Airbnb stands to gain considerably from the end of Covid-19 with highly effective vaccines already being rolled out. Vacation rentals should rebound nicely, and the company’s margins should also benefit from the recent cost reductions that it made through the pandemic. DoorDash, on the other hand, is likely to see growth moderate considerably, as people start returning to dine in restaurants.
There are a couple of long-term factors as well. Airbnb’s platform scales much more easily into new markets, with the company’s operating in about 220 countries compared to DoorDash, which is a logistics-based business that has thus far been restricted to the U.S alone. While DoorDash has grown to become the largest food delivery player in the U.S., with about 50% share, the competition is intense and players compete primarily on cost. While the barriers to entry to the vacation rental space are also low, Airbnb has significant brand recognition, with the company’s name becoming synonymous with rental holiday homes. Moreover, most hosts also have their listings unique to Airbnb. While rivals such as Expedia are looking to make inroads into the market, they have much lower visibility compared to Airbnb.
Overall, while DoorDash’s financial metrics currently appear stronger, with its valuation also appearing slightly more attractive, things could change post-Covid. Considering this, we believe that Airbnb might be the better bet for long-term investors.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.