A big part of retiring early is having enough passive income and accumulated savings to help you live comfortably before you collect Social Security. Dividend shares are fantastic buys for this reason, but growth stocks can also be a good investment for early retirement.
Two growth stocks that could be very lucrative if held long term are Airbnb (ABNB -1.74%) and Shopify (STORE -1.23%). Here’s a closer look at each and why they might help you. take early retirement.
1. Airbnb: Transforming travel one stay at a time
True industry disruptors like Airbnb don’t show up that often. While the vacation rental listing giant has its fair share of headwinds to overcome to thrive in the long term, it has every sign of being a huge moneymaker over the next 10-20 years.
Its site has 4 million hosts and over 6 million active listings on the platform, making it the largest vacation rental platform in the world. The recent travel boom helped the company achieve its most profitable quarter yet in the second quarter of 2022. Its revenue rose 58% year-over-year, while its adjusted profit before interest, taxes, depreciation and amortization (EBITDA) was more than three times the number in the second quarter of 2021.
But a trend favoring unique or alternative accommodations offered by Airbnb has been developing for a while. COVID-19 just accelerated it. And I think it’s here to stay. More hosts are joining the platform, and nightly bookings and experiences on Airbnb are up 25% year over year.
A growing number of cities are banning short-term vacation rentals, which could impact its capacity for long-term growth. However, given the diversity of places to stay across the country, Airbnb should be able to offset the impact of this trend. General stock market volatility and concern about the impact of the recession on travel spending has sent the stock down 32% this year, making today’s price a great time to buy.
2. Shopify: a leader in online shopping
Shopify offers merchant solutions for retail and e-commerce websites. Its products are used in 175 countries, from small local businesses to international retail giants like netflix and Kraft-Heinzand grows rapidly.
Like many other tech stocks, Shopify has had a rough year. The fall in growth stocks — and now, worries about the economy and retail spending — sent shares of the e-commerce platform down nearly 81%. While the stock has certainly seen better days, it still has plenty of long-term potential, making it a perfect buy for early retirement.
Despite the general wavering confidence in the markets, Shopify’s foundations for continued growth remain solid. Revenue grew 16% in Q2 2022 driven by more merchants using its platform as well as a steady increase in usage of its merchant solutions like Shopify Payments and Shopify Capital. The company has also launched its own distribution network to provide faster shipping to its merchants and customers.
Yet the company still recorded a net loss of $38.5 million in the second quarter of 2022. Shopify’s management team overstated growth projections, forcing the company to cut around 10% of its employees in September and leaving a bad taste in the mouths of investors.
However, I still think it’s worthy growth value to be considered by investors. Temporary economic downturns aside, e-commerce sales are expected to continue growing over the next decade. Shopify is perfectly positioned to grow with it, especially with the introduction of its new distribution programs and channels.
Growth stocks can be tricky for retirement because there is no guarantee they will grow as expected. If stability is what you’re looking for, it’s probably best to invest in stocks that pay dividends and have a long history of dividend growth. However, if you’re willing to invest a little to potentially get paid big, these two growth stocks are definitely worth considering.
Liz Brumer Smith has positions at Airbnb, Inc. The Motley Fool has positions and recommends Airbnb, Inc., Netflix, and Shopify. The Motley Fool recommends The Kraft Heinz Company and recommends the following options: Long Calls $1,140 in January 2023 on Shopify and Short Calls $1,160 in January 2023 on Shopify. The Motley Fool has a disclosure policy.
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