The world is witnessing seismic shifts in technology, and two companies are at the forefront of these transformative trends. Tesla (TSLA 3.18%) has become synonymous with the electric vehicle (EV) movement, and while early investors have made substantial profits, the company has yet to achieve its full potential. Meanwhile, Coinbase Global (COIN +0.39%) is paving the way for new applications of cryptocurrencies and blockchain technology, presenting investors with a promising opportunity for high growth.
With a deeper dive, it becomes increasingly apparent why these companies should be on every investor's radar, particularly for those wanting to stay ahead of the curve. Let's take a look at why Tesla and Coinbase have plenty of room to grow your portfolio.
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Driving the electric revolution
Few other trends have garnered as much attention and moved as rapidly as the adoption of EVs. In 2023, almost 1 in 5 cars sold globally will be an EV, up from just 1 in 10 two years ago.
Furthermore, adoption is increasing at an exponential rate. Generally, it takes approximately six years for countries to transition from a 1% to a 10% EV market share and another six years to reach 80%. At this pace, analysts project that by 2030, EVs will account for nearly two-thirds of global auto sales.
With such a high growth rate, start-ups and legacy automakers are clamoring to grab market share. However, as many are finding out, mass-producing EVs is challenging. Over the last quarter, Ford Motor reported an average loss of $36,000 per EV sold. New start-ups are following a similar path, with Rivian Automotive losing around $32,500 and Lucid Group losing a stunning $227,000 per vehicle.
NASDAQ: TSLA
Key Data Points
But one EV maker stands out from the crowd: Tesla, which generates around $8,400 per EV sold. Tesla's optimization of the EV supply chain has helped it become the one of the few profitable pure EV makers, while boasting one of the highest gross profit margins that competes with traditional automakers.
In addition, it produces more vehicles in one month than most companies do in a year and has one of the strongest financial standings with more than $26 billion in cash, a great asset to have in a volatile economy.
Yet, the most intriguing aspect of Tesla isn't just its position as an EV leader. The company is tapping into opportunities that could send its share price to levels yet to be seen due to its development of innovative technologies such as artificial intelligence, autonomous driving, and its humanoid robot, Optimus.
As EV adoption continues to increase worldwide and Tesla pioneers new technological frontiers, investors should view the fact that shares remain down more than 40% from their all-time high as a rare opportunity.
Unleashing the potential of cryptocurrency
With a projected compound annual growth rate of 30% over the next five years, the cryptocurrency sector is revolutionizing finance in a similar way to how the internet transformed communication. As the advent of instant messaging and email made letters obsolete, digital currencies directly connect users without the need for archaic banks or wire transfers.
Furthermore, advances in blockchain technology provide the foundation for new and innovative applications such as tokenizing assets like bonds or real estate. As more people, companies, and even governments begin to realize new use cases of cryptocurrencies, few other companies are in a position to benefit like Coinbase.
In 2021, Coinbase became the first cryptocurrency company to debut on the Nasdaq Stock Market, marking a significant milestone in the industry's growth. Since its public debut just two and a half years ago, Coinbase has rapidly gained popularity and is now one of the most widely used crypto platforms.
NASDAQ: COIN
Key Data Points
Arguably, the most impressive feat of Coinbase's short history as a publicly traded company is the recent transformation of its revenue model. Moving away from relying primarily on transaction fees, Coinbase has launched various innovative solutions, including its own blockchain, an international derivative exchange, a new subscription service, and custodial plans for institutions. Additionally, Coinbase has expanded its operations into more than 34 countries.
While the crypto winter took a toll on share prices, things are looking up. Coinbase dramatically cut costs, generating positive earnings before interest, taxes, depreciation, and amortization (EBITDA) three quarters in a row, and is now just $2 million from turning a profit, something it has yet to do since crypto was in the midst of a bull market.
As a result of this renewed momentum, shares are up more than 190% year to date, currently trading at around $100. However, they remain significantly below their all-time high of nearly $350.
Similar to how Tesla will benefit from trends in EV adoption, Coinbase will benefit from crypto's exponential growth trajectory. While the crypto market continues to shake off the recent bear market, Coinbase's robust business model, innovative products, and technology development are positioning it better than before turbulence hit. And as the likelihood of a bull market looms, Coinbase could easily soar past its all-time high.
