Many growth-oriented investors love tech stocks, since the right company can sometimes deliver multibagger returns in just a few years. Let's take a look at three high-growth tech stocks that turned a $10,000 investment into over $100,000 -- and see if they still have room to run.
1. Match Group
Match Group (MTCH 1.62%), the online dating giant that owns Tinder, was spun off from IAC/InterActiveCorp in an IPO in 2015. For $10,000, investors could have bought 833 shares of its IPO at $12 per share. Those shares, after adjusting for IAC's divestment of its stake in Match earlier this year, are now worth over $100,000.
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Match caught fire after it monetized Tinder with two paid tiers: Plus in 2015, and Gold in 2017. The Plus tier allowed subscribers to undo swipes, swipe overseas, use "Super Likes", and boost the visibility of their profiles. The Gold tier, which was an upgrade for Plus users, added curated picks and the ability of users to see who liked them right away.
Those upgrades turned Tinder into the highest-grossing mobile app in the world last year, according to App Annie. Over 70% of Tinder's subscribers were Gold members last year, and Match is already testing out a new Platinum tier -- which adds "Priority Likes" and direct messages to potential matches -- to further grow its revenue per user.
Match's growth won't stall out anytime soon. Last quarter, Tinder's subscriber count grew 16% year over year to 6.6 million. Match's total number of paid subscribers -- including other apps like Match.com, Hinge, OKCupid, and POF -- rose 12% to 10.8 million. Analysts expect its revenue and earnings to grow 16% and 9%, respectively, this year.
2. Veeva Systems
Veeva Systems (VEEV +3.74%), a cloud service provider for life science companies, went public at $20 per share in late 2013. Investors could have bought 500 shares of Veeva's IPO for $10,000, and that stake would now be worth more than $132,000.
Veeva attracted so many bulls because it dominates a high-growth niche in the cloud market. It serves nearly 900 customers, including pharmaceutical giants like AstraZeneca and Merck.
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Veeva's platform helps those companies maintain customer relationships, track clinical trials and industry regulations, and store and analyze their data. It enjoys a first-mover advantage in this market, and its platform is easy to scale because it runs on Salesforce's services.
Veeva is well-insulated from macro headwinds, since escalating competition between drugmakers spurs stronger demand for its services. That's why Veeva has repeatedly claimed it can generate $3 billion in annual revenue by fiscal 2025 -- more than double its expectations for $1.4 billion in revenue in fiscal 2021, which ends next January.
Veeva expects its revenue to rise 28% to 29% and its adjusted EPS to grow 21% to 22% this year. Veeva is also consistently profitable on a GAAP basis, which makes it a surprisingly stable player in a cloud services market filled with pricey and unprofitable companies.
3. Square
Online payments company Square (SQ +0.10%) went public at just $9 per share in 2015. If you bought 1,111 shares of Square for $10,000 back then, your investment would be worth nearly $200,000 today.
Like Veeva, Square attracted investors with its forward-thinking ideas. Square initially sold card-reading dongles for smartphones. It then expanded into iPad-powered and stand-alone POS (point of sale) systems, which were smaller and cheaper than traditional POS systems, and built an ecosystem of fintech services atop those hardware foundations.
Today, Square generates most of its revenue from software and services -- including its Cash App for peer-to-peer payments, its Square Capital lending arm, Instant Deposit services, and various Seller tools for streamlining analytics, human resources, and payroll tasks.
The Cash App -- which also lets users buy bitcoin and stock -- is becoming Square's core growth engine as people rely less on cash and cards. Square revealed that the Cash App had 30 million active users this June, and MoffettNathanson analyst Lisa Ellis expects that number to double to 60 million within five to seven years.
Square's growth decelerated earlier this year as the COVID-19 pandemic shut down many smaller businesses that use its services. However, the Cash App's growth and its bitcoin revenue largely offset that slowdown, and analysts expect its revenue to rise about 94% this year and another 35% next year. Therefore, Square could remain a top play in the "war on cash" for the foreseeable future.
