Investing in stocks today won't make you rich tomorrow. But if you have a bit of patience and can identify companies that have huge growth opportunities, it could definitely make you rich in the long term.
Fiverr International (FVRR -1.44%), Airbnb (ABNB 1.09%), and Peloton Interactive (PTON -0.97%) are three tech companies in high-growth mode, and they could handsomely reward buy-and-hold investors. Let's take a closer look at these three stocks.
1. Fiverr International: The new way to work
Many companies that were focused on the digital realm posted accelerated growth over the past year. But as the U.S. economy reopens, we're beginning to see indications about which businesses' pandemic-fueled surges were temporary, and which ones were the real deal. Based on the evidence so far, Fiverr belongs firmly in the latter group.
Image source: Getty Images.
In 2021's first quarter, after most segments of the U.S. economy had reopened, Fiverr's revenue growth accelerated to 100% year over year. Other key performance indicators demonstrated similarly impressive improvements, such as a 56% increase in active buyers to 3.8 million, a 10 basis point rise in its take rate, and a 22% year over year increase in spend per buyer. Gross margin on a GAAP basis increased to 83.1%.
Fiverr's platform connects freelancers with those who want to hire them, and it offers a suite of digital solutions for its clients. It has a compelling, high-margin model that makes it simple and cost-effective for businesses and individuals to outsource work. With the shift toward a more work-from-home economy likely to persist long after the COVID-19 pandemic fades, Fiverr is well-positioned for further high growth. That's partly because it has a culture of innovation that has helped it adapt well to the current environment, and that will give it advantages in any environment. For example, it has developed a dedicated business program that targets commercial clients, which spend three times the average marketplace client. Fiverr has several new products in development specifically for this community.
In light of the company's Q1 performance, management increased its 2021 revenue guidance from a growth range of 46% to 50% to a growth range of 59% to 63%. It's also expanding globally and investing in local marketing. In sum, Fiverr looks positioned for a bright future in both the near and long terms.
Image source: Airbnb.
2. Airbnb: The new way to travel
Airbnb has been experiencing a different growth trajectory than Fiverr -- like the rest of the travel industry, it was adversely affected by the pandemic. But its growth story is intact, and forward-looking investors may see this as an optimal time to buy shares of this high-growth company. Airbnb went public in December 2020, and while it traded higher in 2021, as of this writing, its stock price was down 3.2% from where it opened on its first day of trading.
Revenue was down 30% in 2020, and gross booking value (GBV) decreased by 37%. But the travel company showed a clear reversal in Q1 2021, with sales up 5% year over year. GBV rose 52% year over year and was up 3% over Q1 2019. With the COVID-19 pandemic persisting -- and indeed, surging in various parts of the globe -- it is uncertain when a true rebound in the travel sector might occur. This might be one reason for the market's lack of confidence in Airbnb, despite its recovery in Q1.
But several aspects of the first quarter highlight Airbnb's potential. While hotel companies still posted massive revenue declines during the period, Airbnb's revenue got a lift due to its ability to offer different experiences, including longer stays and lodgings in remote areas. The acceleration of the work-from-home trend is playing a part as well, as people are more able to move around to different locales if their job isn't tied to an office in any specific place.
There are many reasons to be excited about Airbnb's future, and now may be your last time to buy its stock at near-IPO prices.
Image source: Peloton Interactive.
3. Peloton: The new way to exercise
Peloton had a breakout 2020 as fitness enthusiasts who were unable to get to the gym went all-in on at-home connected fitness. Peloton's sales were beginning to taper off in 2019, but they came roaring back during the pandemic, and the momentum has continued. In the company's fiscal 2021 third quarter, which ended March 31, revenue was up 141% year over year, paid subscriptions were up 404%, and connected fitness subscriptions grew by 135%.
With fitness centers across the U.S. open again, that period of hyper-growth may be on its way out. But the company has made several moves to expand and keep its sales increasing -- among them, its acquisition of commercial fitness equipment company Precor and its launch in Australia earlier this year. Most recently, it said that it will add a gaming component to its connected fitness workouts. That's on-trend, with video games gaining popularity and other companies, such as Netflix, joining the action.
Is Peloton a one-bike wonder that will lose its luster when people decide they want to exercise socially again or have access to the wider array of fitness equipment that gyms provide? I think it has a lot more up its sleeve, and the potential to remain relevant for the long term, offering investors a shot at high gains.
