Things couldn't be any better for growth stocks. Historically low lending rates, ongoing quantitative easing measures from the Federal Reserve, and a free-spending Congress have rolled out the red carpet for fast-growing companies. Access to cheap capital is abundant, and growth stocks have deployed their cash to hire, innovate, and even acquire other businesses.
Over the next couple of years, a handful of ultra-popular growth stocks are really expected to put the pedal to the metal. The following three growth stocks are projected by Wall Street to deliver aggregate sales increases ranging from 559% to 809% by 2024.
Moderna: 809% implied sales growth by 2024
Perhaps it comes as little shock that one of the most successful coronavirus disease 2019 (COVID-19) vaccine developers, Moderna (MRNA -0.23%), is expected to be one of the fastest-growing companies on the planet over the next four years. After reporting $803 million in 2020 sales, Wall Street's consensus currently has it pegged for $7.3 billion in revenue by 2024. Interestingly, this is down significantly from the $20 billion in net product sales Moderna is forecasting for 2021.
As you're probably aware, there are around a half-dozen global COVID-19 vaccines, but few have offered the initial efficacy that mRNA-1273 brings to the table. Moderna's November-released trial data showed a vaccine efficacy (VE) of 94.1%, which is only rivaled by the 95% initial VE reported by Pfizer/BioNTech for their vaccine. Moderna has become one of the two core vaccination options in developed markets. The company anticipates producing between 800 million and 1 billion doses this year, and following up with between 2 billion and 3 billion doses in 2022.
While there is no shortage of question marks surrounding COVID-19, the biggest looming uncertainty for vaccine developers is whether booster shots or recurring annual vaccines will become necessary. Though we still don't know the answer to that question, the data has begun to point to the need for a third booster shot for vaccinated individuals. In other words, Moderna could be looking at its one-time bump in sales becoming something of a recurring revenue stream.
So, why the drop-off from $20 billion in net product sales in 2021 to Wall Street's estimate of $7.3 billion by 2024? One reason is likely to be competition. We'll almost certainly see a handful of new vaccines enter the market in the coming year(s), which'll reduce Moderna's potential patient pool. There's also the aforementioned uncertainty as to whether or not COVID-19 vaccines will be ongoing for years to come, or if a three-shot course will prove effective.
Maybe the biggest concern of all is that mRNA-1273 is the company's only revenue-generation product. With a $168 billion market cap, things would have to be perfect from here on out for Moderna to justify this valuation -- and that's unlikely.
Nio: 562% implied sales growth by 2024
Speaking of pedal-to-the-metal growth, electric vehicle (EV) manufacturer Nio (NIO -3.69%) is projected to lay down some serious rubber from a sales perspective. After reporting $2.55 billion in sales last year, Wall Street is counting on Nio to reach nearly $16.9 billion in full-year revenue by 2024.
Nio finds itself in the right place at the right time in multiple respects. The battle against climate change is driving businesses and consumers to act. One of the more logical shifts we're witnessing is a push toward the electrification of consumer vehicles and enterprise fleets. This'll be a multi-decade replacement cycle, providing ample opportunity for multiple EV makers to shine. And Nio is headquartered in China, which happens to be the largest auto market in the world. As I said, right place and right time.
Nio would love nothing more than to expand its production capacity at the moment, but supply chain issues concerning the chips used in new automobile production are hurting capacity throughout the entire industry. Nio delivered 5,880 vehicles in August, but had delivered around 8,000 vehicles in each of the previous two months. Once these supply issues ease, Nio should push for an annual delivery run-rate of 150,000 EVs.
What's equally exciting is the innovation we're seeing on all fronts from Nio. In addition to introducing a new vehicle each year, management rolled out a battery-as-a-service subscription program last year. This program will reduce the upfront cost of Nio's EVs in exchange for enrolling buyers into a fee-based monthly program that'll allow them to swap out or upgrade their batteries in the future. Effectively, Nio is exchanging some near-term sales for steadier long-term cash flow, higher margins, and improved customer loyalty.
Nio isn't cheap by any means, but Wall Street's lofty sales projections are achievable.
Snowflake: 559% implied sales growth by 2024
Another ultra-popular growth stock that's expected to move the revenue needle in a big way through 2024 is cloud data-warehousing company Snowflake (SNOW -1.18%). Taking into account that Snowflake's fiscal year doesn't coincide with a normal calendar year, we're looking at revenue growing from $592 million in fiscal 2021 to about $3.9 billion in fiscal 2025. That's a projected increase of 559%.
Prior to the pandemic, we were witnessing a pretty steady shift by businesses to create an online presence and move data into the cloud. But with the pandemic ongoing, this shift sped up considerably. With hybrid workplaces now a common theme and more data than ever stored in the cloud, demand for cloud infrastructure services couldn't be more robust.
What makes Snowflake so intriguing is the company's unique operating approach. For instance, its infrastructure is built atop many of the most popular cloud services, such as S3, Azure, and Google Cloud. Normally, sharing data between these competing services isn't easy. However, it's a piece of cake for Snowflake members since its infrastructure is layered on top of these services.
Snowflake is also different in the way it charges its clients. Instead of pushing its customers toward a subscription-based service, Snowflake charges customers based on the amount of data stored and Snowflake Compute Credits used. In doing so, it's created a more transparent pricing model that's clearly resonating with its customers. After all, existing clients spent 69% more in the most recent quarter than they did in the prior-year period.
In June, the company's management team outlined their goal of reaching $10 billion in annual product sales by fiscal 2029. It's a lofty target, but one that's achievable considering how much data is being shifted into the cloud.
The bigger question that remains unanswered is whether Snowflake can offer meaningful upside at a whopping multiple of 50 times Wall Street's fiscal 2023 sales forecast. My inclination is to say no, but we also haven't seen another company offer the data-warehousing scale that Snowflake can deliver.