Why I’m bullish on Airtasker (ASX:ART) stock price
I think the Airtasker Ltd (ASX: ART) The stock price has great potential for long-term growth.
If you’ve never heard of Airtasker before, they’re a company that owns and operates a platform/website. People who need work can post tasks on Airtasker, and then people who want to do the job can offer to do it.
There are a multitude of different types of work that can be done there, including furniture assembly, cleaning, administration, accounting, delivery, web design, and more.
I think there’s a lot to like about the company at Airtasker’s current stock price, but here are three:
Global addressable market
Airtasker may have started in Australia, but it is now expanding to the US and UK at a rapid pace, although it is starting from a small base in both of these countries.
One of the exciting things about a long-term investment is seeing that it has a very long runway in which it can grow. A business that can grow rapidly for 10 or 15 years is more likely to do well than a business that has only a few years of good growth potential ahead of it.
The United States and the United Kingdom are attractive markets on their own. But the business can expand to many other countries in the longer term, such as Canada, European countries, South Africa, etc.
High gross profit margin
Few companies can achieve a gross profit margin of more than 80%. One of them on the ASX is Xero Limited (ASX:XRO).
But Airtasker has a gross profit margin of over 90%. As the business generates more revenue, it mostly turns into gross profit, which Airtasker can use to spend whatever they want. The growth in size will be good news for the company’s profitability.
I think the high margin will be very helpful for the Airtasker stock price over time.
In the first half of FY22, Airtasker’s gross profit margin was 93%.
Airtasker is not looking to make a lot of profit in the short term. It reinvests most/all of its profits into more growth. This makes a lot of sense for at least two reasons.
First, there is a huge market for Airtasker. It can spend a lot on marketing in the US and UK, and it should be worth the growing advertising budget. It also needs to build its teams of employees, have the right “infrastructure” of a globally growing business, and so on. Airtasker will not “waste” money if it continues to reinvest.
Second, it doesn’t lose some of its cash flow to taxes by not yet making a profit. Obviously, taxes are important to society. But the company can operate close to the break-even point and thus increase shareholder value.
Final Thoughts on Airtasker Stock Price
Airtasker’s stock price has fallen nearly 50% in the past six months. A painful fall. But I don’t think the current valuation reflects the company’s significant potential. Inflation could help increase revenue if the price of tasks on the site increases.
Airtasker is one of my favorite ASX growth stocks for the next few years.