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, an increase of more than sixfold. Plus, its stock has grown 800% over the past eight years.
At the time, $74 billion probably seemed like a huge number. Today, it's still a huge number, and there are fewer than 50 U.S. companies that took in that amount of sales in 2021. Naysayers then may have questioned Amazon's continued prospects, and they would have missed out on incredible returns.
At the same time, there were plenty of less well-known companies that arrived on the scene and stole other growth companies' thunder. Think of Block (formerly Square), which went public in 2015 and gained around 2,000% before falling last year. Its price still sits 570% above its IPO price.
So while I wouldn't count out the Amazons of the market, I want to highlight two smaller companies that could be huge growth stocks by 2030: Revolve Group (RVLV -2.66%) and Airbnb (ABNB -0.61%).
1. Revolve Group
Revolve Group has taken the mantle from the fashion giants of a different era, and it's thriving in the digital age. It isn't one feature but instead a multi-layered approach to fashion e-commerce that differentiates its model and generates strong revenue growth. Revolve uses social media as an integral element of its marketing process, recruiting celebrity influencers to display its products on their blogs and web pages.
Its collection features more than 70,000 carefully selected apparel, footwear, and beauty products, and it's all online -- and all underpinned by an artificial intelligence-powered system that informs product selection, back-end management, marketing, and everything else.
This has resulted in high growth over the past few years as consumers were forced to accelerate digital adoption. Revolve managed to maintain high year-over-year sales growth and even squeezed out a tiny increase in net income in the 2022 first quarter, when things were going south for most retailers.
In the second quarter, however, supply issues and inflation began to catch up. Sales increased an impressive 27%, and gross profit increased one percentage point as well. Net income, however, decreased 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 increased year over year as well.
From these numbers it becomes clear that current macroeconomic conditions, as opposed to business problems, have been the challenge. Operationally, the company is still investing in upgrading its services and isn't taking any break in expanding even through this challenging time. Co-CEO Mike Karanikolas made a powerful point in observing that "almost universally, in international markets where we have invested to elevate service levels, our growth has accelerated in the months that follow."
Revolve Group is still a fairly small company, surpassing $1 billion in trailing 12-month sales in the second quarter. Between its efficient management, data-informed model, and ability to reach its target market in unique ways, this company has a huge future ahead. It may be the biggest fashion-oriented growth stock right now, and it could be even bigger by 2030.
2. Airbnb
Airbnb is already revolutionizing the travel industry with its vacation rental platform, and it could disrupt it further over the next few years as it expands with new services and reaches new customers.
It posted a fantastic rebound from pandemic lows last year even as travel remains curtailed and traditional hotel chains are still experiencing lowered sales levels. And it's posting year-over-year growth on top of the fabulous recovery. In the 2022 second quarter, revenue increased 58% over last year to $2.1 billion, and net income grew to nearly $380 million after a $68 million loss last year.
Airbnb is an online platform, giving it tremendous agility in a field that's typically stocked with large hotels or other expensive assets. It has an asset-light model that can easily shift to meet demand under changing conditions. For example, many travelers are returning to city vacationing 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 has been stays of 28 days or more. That's in line with the work-at-home trend that's been gaining traction since the pandemic started. Airbnb can offer travelers more longer-stay options in residential and suburban neighborhoods, and adding rooms is as simple as recruiting hosts. Many hosts turn their Airbnb rentals into a full 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 searching by categories, which provides users with expanded search results. This contributed to the highest-ever numbers of visitors since the launch earlier this summer.
The culture of innovation coupled with the agility of the model make for a powerful company that may be just getting started, and it could be one of the biggest growth stocks in 2030.
