Growth stocks that are typically bought for their moneymaking potential have wiped out significant shareholder wealth in recent weeks. What investors don't remember though, is that growth stocks don't make you real money over a span of weeks or months -- they're part of a long-term game plan and often require years to build you real wealth.
That also means selloffs like the recent one shouldn't scare you. On the contrary, these drops are an opportunity to add growth stocks that have the strongest potential to rebound once the market shrugs off macro-economic fears. So if you have some cash on you right now, here are three growth stocks that could take off again.
There's risk, but also the lure of unlimited upside potential
If there's one trend that's taking the world by storm, it's electric vehicles (EVs). Demand is so high that nearly every major automaker has entered the space and is pumping billions of dollars into EVs. Startups are even more aggressive, innovating and launching EVs to give top names a run for their money. Lucid Group (LCID -1.39%) is one of them -- it's built electric cars with a stunning range rating of 520 miles, unseating EV leader Tesla. That's no mean feat. Lucid Air also won the 2022 MotorTrend Car of the Year award.
Image source: Getty Images.
Lucid builds its own battery and powertrain systems and supplies them to Formula E racing cars. Lucid's first luxury electric car is fully booked and being delivered; it's taking reservations for three Air trims, had 17,000 reservations across all trim variants as of Nov. 15, is all set to launch the much-awaited SUV Gravity in 2023, and is rapidly expanding production capacity to 90,000 vehicles per year by 2023. Lucid also has plans to expand beyond the U.S. into the Middle East, China, and Europe over the next few years.
Unfortunately, something's come up that's shaken investors' confidence in Lucid: a probe by the U.S. Securities and Exchange Commission (SEC). It's reminiscent of what happened to Nikola, but unlike Nikola, Lucid's cars are already out there on the roads and have received official range ratings from the EPA. So although the SEC probe poses a risk, it's too early to guess its implications on Lucid. If it gets a clean report or otherwise comes out relatively unscathed, Lucid's incredibly promising EV technology and long-term plans could easily set the stock off again.
When slow growth is also compelling enough
Shopify (SHOP 1.25%) shares have lost nearly a quarter in value in just the past one month as of this writing, but there seems to be no stopping the e-commerce company's growth. In the third quarter, Shopify's gross merchandise value (GMV) jumped 35% to nearly $42 billion, and revenue soared 46% to $1.1 billion, both year over year.
Shopify has said its full-year revenue growth may not match 2020's growth level, but that doesn't change the fact that the company is still headed for a record year and more merchants are signing up on its platform -- it last put its merchant count at above 1.7 million. So Shopify took only 16 months to double its cumulative GMV so far to $400 billion. It took the same company 15 years to reach the first $200 billion.
This fascinating statistic only goes on to show how big the opportunities in e-commerce are. Shopify is also a global company that's constantly innovating and adding partners to offer its merchants multichannel ways to market and sell products. In the longer term, Shopify wants to expand its fulfillment network and foothold in the multitrillion-dollar wholesale business-to-business market.
Shopify's operational growth is there for all to see in its numbers, and as it continues to deliver strong numbers quarter after quarter -- Shopify clocked record Black Friday-Cyber Monday holiday sales worth nearly $6.3 billion -- the market could soon lift this growth stock higher again.
Trillion-dollar opportunities
Upstart Holdings (UPST -0.78%) shares have more than halved in just the past three months, but there's been absolutely no change in the company's investing thesis. And that's precisely why this growth stock could take off again.
In its third quarter, Upstart's revenue surged 250% and net income jumped 201% year over year. Upstart's partner banks originated loans worth a whopping $3.1 billion across the fintech company's platform in Q3, with the number of loans surging 244% over Q3 2020. Of course, 2020 was an exceptionally challenging year for comparison, but Upstart's sequential growth in recent quarters is hugely impressive as well.
Clearly, Upstart's artificial-intelligence-driven lending platform that screens potential borrowers on more than 1,500 data points based on loan data of more than a million people is getting more hits from banks that want low-risk loans and borrowers that want low-rate loans. Upstart recently also struck a partnership with the National Bankers Association to expand its services to minority-owned depository institutions.
Do you think Upstart stock will still languish if it can continue to deliver such high loan origination and revenue growth numbers in 2022? Remember, Upstart is also already profitable. In fact, Upstart is only getting started in the U.S. auto loan space, a market touted to be worth more than $600 billion. So there are personal loans, auto loans, and mortgage loans markets that Upstart is currently catering to. These are all huge lending markets worth trillions of dollars combined, which, when exploited, could light a fire under Upstart stock again.
