I think that the Airtasker Ltd (ASX: ART) share price has plenty of growth potential for the long-term.
If you haven’t heard of Airtasker before, it’s a business that owns and operates a platform/website. People that need work doing can post tasks onto Airtasker, and then people willing to do the job can offer to do it.
There are tons of different types of work that can be put on there, including furniture assembly, cleaning, admin, accounting, delivery, website design, etc.
I think there are plenty of things to like about the business at the current Airtasker share price, but here are three of them:
Global addressable market
Airtasker may have started in Australia, but it’s now expanding in the US and UK at a fast rate, though it’s starting from a small base in those two countries.
One of the exciting things about a long-term investment is seeing that it has a very long runway that it can grow into. A business that can grow quickly for 10 or 15 years is more likely to do well than a business that only has a few years of good potential growth ahead.
The US and UK alone are attractive markets. But the company can expand into loads of other countries over the longer term, such as Canada, European countries, South Africa, etc.
High gross profit margin
Not many businesses 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 more than 90%. As the business adds more revenue, it mostly turns into gross profit, which Airtasker can use to spend on whatever it wants to. Growing in size will be good news for the profitability of the company.
I think the strong margin will be very handy for the Airtasker share price over time.
In the first half of FY22, the Airtasker gross profit margin was 93%.
Strong re-investment
Airtasker isn’t looking to make lots of profit in the short-term. It is re-investing most/all of its profit into more growth. This makes a lot of sense for at least two reasons.
Firstly, there is a massive market for Airtasker to aim at. It can spend very heavily on marketing in the US and the UK, and it should be worth the growing advertising budget. It also needs to build its employee teams, have the right ‘infrastructure’ of a globally-growing business, and so on. Airtasker won’t be ‘wasting’ money if it keeps re-investing.
Second, it isn’t losing some of its cash flow to tax by not making profits yet. Obviously, taxes are important for society. But the company can operate close to breakeven and grow more value for shareholders that way.
Final thoughts on the Airtasker share price
The Airtasker share price has sunk almost 50% over the last six months. A painful drop. But I don’t think the current valuation reflects the significant potential that the company has. Inflation could help grow revenue if the price of the tasks on the site increases.
Airtasker is one of my preferred ASX growth shares for the next several years.
