Known as the home of high-profile tech stocks, the Nasdaq Composite is up a phenomenal 263% over the last decade. While that was a period of low inflation and easy-money policy from the Federal Reserve, things may not be the same going forward.
When it comes to stocks, while a rising tide lifted all boats in the past, maintaining the same momentum might be difficult. What's more important would be to pick actual businesses whose prospects are amazing, and have the least interference from changing macroeconomic conditions. I have my eye on two stocks at the forefront of their respective industries that could provide even greater returns in the coming years.
If you're looking to build productive long-term portfolios, let's see why Coinbase Global (COIN 5.68%) and Tesla (TSLA -1.11%) are among the upper echelons of companies on the Nasdaq.
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Crypto's champion
With cryptocurrencies estimated to grow at a compound annual rate of 30% over the next five years, Coinbase should be on the radar of every growth investor. Thanks to its crypto-centric business model, Coinbase serves as a proxy to capitalize on the burgeoning crypto economy without the need to navigate the complexities of buying individual cryptocurrencies.
More importantly, though, Coinbase possesses a remarkable business model. This wasn't always the case, especially when the crypto market slumped into a historically lousy bear market, but much has changed since those days.
Before the bear market, Coinbase was heavily dependent on transaction fees, accounting for over 90% of its total revenue at one point. However, when the crypto market took a turn for the worse, and the platform experienced a decline in activity, this proved to be a significant vulnerability, leading to a net loss of over $1 billion.
Yet, thanks to its recent efforts, only 53% of its revenue comes from transaction fees today as its innovative "Subscription and Services" product suite has gained traction. This newer segment comprises staking rewards, custodial fees, and earnings from its stablecoin partnerships, and as a result, Coinbase has emerged from the bear market more resilient than ever. With expenses down by nearly one-third from last year, Coinbase's revamped business model has put it just $2 million away from turning a profit.
More than just an EV leader
Like cryptocurrencies, electric vehicles (EVs) are projected to grow at an exponential rate in the coming years. Analysts estimate 2 out of 3 cars sold globally will be an EV by 2030. And Tesla is in perhaps the strongest position to benefit from this market opportunity.
Rising to become the most valuable automaker in the world, much of Tesla's recent success can be associated with its perfection of the EV supply chain. With a projected production of over 1.8 million vehicles in 2023, Tesla's manufacturing capabilities are virtually unrivaled. Best of all, with more factories planned in various countries worldwide, Tesla is in the driver's seat to benefit from the adoption of EVs.
However, EVs may not be the most profitable of the company's long-term prospects. With a cash reserve of $26 billion, Tesla is heavily investing in futuristic technologies, including artificial intelligence, autonomous driving, and robotics. These innovations not only have the potential to transform society, but they also hold the potential to become profitable sources of revenue.
Tesla's promise of future success in the EV market clearly makes it an attractive stock to hold for the long term. But when accounting for the opportunities that its other technological endeavors could bring, Tesla could turn out to be the most productive part of a portfolio for decades to come.
