2 stocks that could be worth more than Tesla by 2030

Few stocks have performed as well as Tesla ( TSLA -3.00% ) in the last decade. With fervent investor optimism and rapid blue chip growth, the electric vehicle (EV) maker now has a market capitalization of over $1 trillion, making it one of the most valuable companies in the world.

As investors try to find the next wave of potential stocks to outperform the market, it may be helpful to look back at the recipe for a stock like Tesla, or any of the tech giantsto reach such high market values.

To reach a market capitalization of more than $1 trillion this decade, there are three basic criteria a company needs:

  1. A revenue base already running into the billions.
  2. A huge total addressable market (TAM).
  3. A track record of fast, top-of-the-line growth.

airbnb ( ABNB -2.02% ) Y Coupang ( CPNG 0.23% ) perfectly fit these criteria. Here’s Why They Might Be Worth More Than Tesla by 2030.

A person counting dollars in his hands.

Image source: Getty Images.

1. Airbnb: redefining travel

Airbnb is a travel marketplace where people can charge travelers to stay in properties they own. These properties can be anything from mega-mansions in Beverly Hills to treehouses in the Australian rainforest; Essentially, they allow people to stay in unique places that are different from hotels. The idea was started by Brian Chesky and two others in 2008, and since then the platform has grown like a gangster. Today, Airbnb has a market capitalization of $105 billion.

In 2021, the company had 300 million nights and experiences booked on the platform, up 56% year over year, as the world slowly recovered from the COVID-19 pandemic. However, nights booked are still 8% lower than in 2019, showing that travel has yet to fully recover around the world. Revenue reached $6 billion in 2021, growing 77% year over year, and adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) were $1.6 billion. That gives the company a 26.6% profit margin even as it faces the headwind of the pandemic.

Therefore, Airbnb fits two of the three criteria with a large revenue base and strong revenue growth. But what about the TAM? The travel and tourism industry is one of the largest in the world, taking in $9.2 trillion worldwide in 2019 (the last two years have been lower due to the pandemic). Airbnb only serves a part of the industry at the moment and has many competitors like hotels and other travel platforms like booking.com and VRBO. But with so much consumer spending each year, Airbnb’s annual revenue has a very high ceiling.

With an excellent growth track record, huge market opportunity, and high profit margins, I believe Airbnb has a chance to reach a $1 trillion market cap by 2030.

2. Coupang: The South Korean Amazon

Coupang is a South Korean e-commerce company with a business model similar to that of Amazon‘s. It has a wide selection of products along with its own fulfillment and delivery network, giving it an edge over the competition. This has enabled Coupang to quickly gain e-commerce market share in Korea, growing from 7.4% in 2017 to 15.7% last year. Like Amazon, Coupang also has a premium subscription service called Rocket WOW that offers free shipping and special perks. It had 9 million members at the end of 2021.

Last year, Coupang generated $18.4 billion in revenue, up 54% year over year. As you can see from your market share numbers, you still have room to grow within your local market. However, to have a chance of becoming a billion dollar business, it will have to expand. Fortunately, you already have plenty of initiatives to make this happen. First, in addition to its e-commerce platform, it’s launching a video streaming and advertising business (again, similar to Amazon) that will hopefully increase spend and profitability. Second, it is expanding outside of traditional e-commerce into food and grocery delivery. Third, it has plans to expand outside of South Korea to Singapore, Taiwan, Japan, and potentially other regions of Southeast Asia.

Unlike Airbnb, Coupang has low margins, generating less than $3 billion in gross profit last year and a net loss. This means that it will probably have to have a much larger revenue base by 2030 to reach a $1 trillion market cap. But with close to $20 billion in revenue, steady market share gains, new business initiatives and international expansion, I think Coupang can grow its top-tier revenue at a high rate for a long time to come.

While it’s clear that both Coupang and Airbnb have a shot at a $1 trillion market cap, you have to remember that there are risks with any investment. Nothing is guaranteed in the stock market, and if you buy any of these stocks, you’re not guaranteed to outperform the market for the next decade. But right now, both companies show promise worth considering.

This article represents the opinion of the writer, who may disagree with the Motley Fool premium advice service’s “official” recommendation position. We are motley! Questioning an investment thesis, even one of your own, helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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