This Disruptive Tech Stock Just Went on Sale. Here's Why I'm Buying More of It.

Airbnb (NASDAQ: ABNB) has been one of the biggest disruptors of the mobile era. The company has transformed the hotel and accommodations industry, essentially inventing a new category of short-term lodging.

While Airbnb has become a formidable player in the accommodations industry, the stock hasn't always been a winner as it faces a number of risks from regulators, rising competition from traditional online travel agencies like Booking Holdings , and the volatility inherent in a cyclical industry like travel.

That vulnerability was on display in its second-quarter earnings report as the stock plunged 17% in after-hours trading, reaching its lowest point in more than a year. Let's break down the earnings report before discussing why the sell-off offers a good buying opportunity for investors.

Image source: Airbnb.

The travel recovery fades

Airbnb's momentum from the recent travel boom seems to be fading. Peers like Booking have already reported a slowdown. The home-sharing leader reported 11% revenue growth to $2.75 billion, but that was its slowest growth in at least two years, though it did slightly beat estimates.

On the bottom line, growth was more modest. Adjusted earnings before interest, taxes, depreciation, and amortization ( EBITDA ) rose 9% to $894 million, while net income fell due to an increase in income taxes from a release in a valuation allowance, an increase in stock-based compensation, and sales and marketing spending weighed on profits. On a generally accepted accounting principles ( GAAP ) basis, earnings per share fell from $0.98 to $0.86, which was short of estimates at $0.91.

Management also said that booking lead times were getting shorter, a sign that budgets may be getting tighter and that travelers were getting more selective about trips. Finally, the company called out slowing demand in the U.S. as well, which also seemed to weigh on the stock.

For the third quarter, management called for revenue growth of 8% to 10% to a range of $3.67 billion to $3.73 billion, which was below estimates at $3.84 billion. The company also guided for flat EBITDA growth due to continued investments in marketing.

Airbnb stock goes on sale

If the after-hours sell-off holds, Airbnb stock will be about as cheap as it's ever been. Its market capitalization will have fallen to $70 billion, but the company just reported $4.3 billion in trailing free cash flow. Based on free cash flow then, the stock trades at a multiple of just 16. It earned $3.9 billion in EBITDA, giving it an EBITDA multiple of just 18, which again looks like a great price to pay for a company with Airbnb's growth potential.

Airbnb also continues to buy back stock, which will get easier with the share price down and will act as a natural tailwind for per-share growth.

The future looks bright

Airbnb still has a massive market to penetrate, and the company sees a large opportunity in bringing penetration rates in countries like Japan, Spain, and Italy up to those of its most mature markets like those in the U.S., U.K., France, Canada, and Australia.

CEO Brian Chesky aims to expand Airbnb's business to encompass new verticals like long-term says, guest services, and host services, and he said the company would introduce new products around those businesses in 2025. He said on the earnings call:

The new Airbnb ... will be about a lot more than short-term rentals. It's going to be about long-term stays. It's going to be our guest services, host services, and many new offerings. And you'll begin to see that next year.

In other words, Airbnb's addressable market should get significantly bigger in the coming years.

Why Airbnb is a buy

While the stock pullback is understandable, Airbnb's competitive strengths remain intact, and its growth opportunity is still huge. With the stock trading at a free-cash-flow multiple of just 16, the price looks great as well. Investors can count on long-term growth in the travel industry, especially as its popularity continues to grow.

Jeremy Bowman has positions in Airbnb. The Motley Fool has positions in and recommends Airbnb and Booking Holdings. The Motley Fool has a disclosure policy .