Eight years is a long time in the life of a stock. Consider that in 2013, Amazon had $74 billion in sales. In 2021, it had $470 billion, a more than six-fold increase. Moreover, its stock has increased by 800% over the past eight years.
At the time, $74 billion probably seemed like a huge number. Today, that’s still a huge number, and there are less than 50 U.S. companies that made that amount of sales in 2021. Opponents then may have questioned Amazon’s continued outlook, and they would have missed incredible returns.
At the same time, many lesser-known companies arrived on the scene and stole the show from other growing companies. Think about To block (formerly Square), which went public in 2015 and gained around 2,000% before falling last year. Its price is still 570% above its IPO price.
So, while I’m not counting the Amazons of the market, I want to highlight two small companies that could be huge growth stocks by 2030: revolution group (RVLV 6.32%) and Airbnb (ABNB 3.75%).
1. Revolution group
Revolve Group has picked up the torch from the fashion giants of another era, and it’s thriving in the digital age. It is not a feature, but rather a multi-layered approach to fashion e-commerce that differentiates its model and drives strong revenue growth. Revolve uses social media as an integral part of its marketing process, recruiting influencers to display its products on their blogs and web pages.
Its collection includes more than 70,000 carefully curated apparel, footwear and beauty products, and it’s all online – and all backed by an AI-powered system that informs product selection, back-end management, marketing and everything else.
This has driven strong growth in recent years as consumers have been forced to accelerate digital adoption. Revolve managed to maintain high year-over-year sales growth and even managed to get a small increase in net profit in the first quarter of 2022 when things were looking bad for most retailers.
In the second quarter, however, supply problems and inflation began to catch up. Sales increased by 27%, and gross profit also increased by one percentage point. Net income, however, fell 48% to $16.3 million. Despite the pressure, Revolve added 124,000 active customers for a total of 2.2 million. Orders placed and average order value also increased year over year.
From these numbers, it becomes clear that current macroeconomic conditions, as opposed to trade issues, have been the challenge. Operationally, the company is always investing in upgrading its services and taking no breaks in its expansion, even in these difficult times. Co-CEO Mike Karanikolas forcefully remarked that “almost universally, in international markets where we have invested to raise service levels, our growth has accelerated in the months since.”
Revolve Group is still a fairly small company, surpassing $1 billion in 12-month sales in the second quarter. Between its efficient management, data-driven model, and ability to reach its target market in a unique way, this company has a huge future ahead of it. It may be the biggest fashion-focused growth stock right now, and it could be even bigger by 2030.
Airbnb is already revolutionizing the travel industry with its vacation rental platform, and it could disrupt it further in the coming years as it expands with new services and reaches new customers.
It has posted a fantastic rebound from last year’s pandemic lows, although travel remains constrained and traditional hotel chains are still seeing declining sales levels. And it shows year-over-year growth on top of the fabulous recovery. In the second quarter of 2022, revenue rose 58% from a year ago to $2.1 billion, and net income reached nearly $380 million after a loss of $68 million. last year.
Airbnb is an online platform, which gives it great agility in a field typically filled with large hotels or other expensive assets. It has an asset-light model that can easily scale to meet demand under changing conditions. For example, many travelers are returning to town on vacation after local rentals became an attraction when travel was restricted.
Another is that for several consecutive quarters, the fastest growing category in terms of length of stay is stays of 28 days or longer. This matches the work-from-home trend that has been gaining traction since the start of the pandemic. Airbnb can give travelers more options for longer stays in residential and suburban neighborhoods, and adding rooms is as easy as recruiting hosts. Many hosts are turning their Airbnb rentals into a full-fledged business and continue to add rooms to the platform.
The company is also focused on innovation, constantly adding new features and services to improve the platform. Part of its summer 2022 release is category search, which provides users with expanded search results. This has contributed to the highest visitor numbers ever since launching earlier this summer.
The culture of innovation coupled with the agility of the model make it a powerful company that may just be getting started, and could be one of the most important growth stocks in 2030.
John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a board member of The Motley Fool. Jennifer Saibil holds positions at Airbnb, Inc. The Motley Fool holds positions and recommends Airbnb, Inc., Amazon, Block, Inc., and Revolve Group Inc. The Motley Fool has a Disclosure Policy.