2 growth stocks I bought in April

Investing can be difficult. To be successful, you need to do your research, set a course, and follow it through. Expectations rarely match reality – for better or for worse. But what’s important is that you stick to your plan and remember your central investment thesis, or the very reason you bought a stock in the first place.

During the first week of April, I established new positions in several companies. I want to highlight two: Instantaneous (NYSE: SNAP) and Airbnb (NASDAQ: ABNB). Here I’ll tell you why I bought them and what key developments I’ll be watching.

Image source: Getty Images.

Instantaneous

What I love about Snap is that it has several key trends on its side. First of all, the company is hugely successful with young people. According to internal data, more than 75% of 13-34 year olds in the US, UK, Australia, France and the Netherlands use Snapchat.

This type of reach is pure gold for advertisers looking to market their products to teenagers and young adults who may be looking to buy their first car, get married, or start a family. Marketers know it’s easier to build brand loyalty among younger people, and they’re willing to pay extra to reach these impressionable consumers.

I also like Snap’s potential synergies with the metaverse. Snap defines itself as a camera company that “contributes to human progress by enabling people to express themselves, live in the moment, learn about the world and have fun together”. This mission statement fits perfectly with the metaverse – a space where users interact with others in computer-generated or augmented reality (AR).

In its most recent quarter, Snap reported that, on average, more than 200 million “snapchatters” engaged with its AR features. Devery day. This includes enterprise user-to-user AR chat lenses, physical element analytics, and local lenses that transform real-world landscapes into AR experiences.Given that most Snap users are already familiar with the company’s AR – and used to interacting with it on their phones – I think Snap has a leg up on competitors like Meta.

Third, Snap’s financial fundamentals are strong. In 2021, revenue reached $4.1 billion, representing 64% year-over-year growth. Gross margins increased to 58%. The number of daily active users increased to 300 million from 245 million the previous year, and the average revenue per user (ARPU) reached $4.06 in the fourth quarter of 2021, up $0.57 from the previous quarter. Additionally, the company is expected to make a profit for the first time in 2022.

Analysts expect earnings per share (EPS) of $0.52 for the full year and $0.01 for the first quarter of 2022. The company will release its first quarter results on April 21. I’ll be keeping a close eye on user growth and ARPU, two of the most important numbers for a social media company.

Airbnb

The second stock I was looking forward to getting my hands on was Airbnb. Like Snap, Airbnb has several megatrends providing it with tailwinds.

First, Americans are starting to travel again. Solid profits from Delta point out that the recovery in commercial travel is real. Without question, the pandemic has created an enormous amount of pent-up vacation demand. And as travel resumes, Airbnb is taking advantage.

The second big reason I wanted to own Airbnb is because of its “disruptive” status. Traditional hotel companies have to make huge capital investments to offer their customers new destinations and newly renovated rooms. On the other hand, Airbnb relies on its hosts to perform the upgrades. Plus, with some four million hosts in its network, Airbnb offers locations and experiences that are hard to match.

Finally, the company’s finances are sound. Revenue for 2021 was $6.0 billion, up 77% from a pandemic-weakened 2020. Analysts expect 2022 EPS to hit $1.34, up from $0.97 two months ago.

The company does not release its first quarter results until mid-May. When they do, I’ll want to see growth in gross booking value and average daily rates, both of which are crucial to Airbnb’s long-term prospects.

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Randi Zuckerberg, former director of market development and spokesperson for Facebook and sister of Meta Platforms CEO Mark Zuckerberg, is a board member of The Motley Fool. Jake Lerch owns Airbnb, Inc. and Snap Inc. The Motley Fool owns and recommends Airbnb, Inc. and Meta Platforms, Inc. The Motley Fool recommends Delta Air Lines. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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