Editor’s Note: This article was updated on April 21, 2021, to correct some information about Okta.
Electric vehicle (EV) giant Tesla, Inc. (NASDAQ:TSLA) has been one of the most talked-about stocks in the past decade. Under the leadership of its brash and eccentric CEO Elon Musk, the company has captivated an audience that extends far beyond science geeks and investors. It has been the torch-bearer for one of the biggest stories emerging from the stock market in recent times. Doing so has inspired several other disruptive stocks to strive to become the next Tesla in their respective industries.
Tesla’s entry into the automotive world has been a significant talking point among industry analysts, scholars and customers. Most have been critical of its viability and long-term prospects, but it has emerged as a threat to the industry’s reigning powers. Tesla has embodied the disruptive innovator’s concept, but several other companies appear to be doing the same.
Therefore, let’s look at some of these companies that could potentially become the next Tesla.
- Digital Turbine (NASDAQ:APPS)
- Repligen (NASDAQ:RGEN)
- Etsy (NASDAQ:ETSY)
- Trupanion (NASDAQ:TRUP)
- Nio (NYSE:NIO)
- Okta (NASDAQ:OKTA)
- Lovesac (NASDAQ:LOVE)
The Next Tesla: Digital Turbine (APPS)
Digital Turbine is a mobile communication software provider, which acts as an intermediary for app developers and advertisers to position themselves on the virtual shelves of various networks. Though the company is relatively young, it has robust financials and has posted blowout earnings results as of late. With five-year average revenue growth of 62%, APPS stock has grown over 8,000% over the past five years.
Revenues in its third quarter were up 146% to $88.6 million. Its application media segment posted 58% growth to $56.9 million. Additionally, it has been beefing up its app-discovery platform after its acquisition of peer Mobile Posse last March.
Additionally, it has also purchased other advertising and engagement companies, including AdColony, Triapodi and Fyber. It plans to further consolidate its app delivery and discovery services under its platform. Therefore, it has a massive growth runway ahead of it at this time.
Repligen develops bioprocessing tools for the manufacturing of biologic drugs. These are the kind of drugs that are being developed as therapeutics and vaccines for fighting the pandemic. It primarily focuses on the downstream manufacturing of drugs, including the recovery, filtering and purification of bio synthetics. RGEN stock has shot up a massive 103% in the past year, making it one of the industry’s best-performing companies.
Earnings results have been solid for the company this year and have hardly been bogged down by the pandemic-induced weaknesses. Revenues in the fourth quarter are up 56% to $108.6 million. Additionally, GAAP and non-GAAP earnings-per-share (EPS) comfortably beat analyst estimates in the quarter. The company has witnessed double-digit revenue growth in the past 20 quarters. Its 2021 revenue guidance points to overall revenue growth of 37% to 43%.
Hence, it appears that RGEN stock’s momentum wouldn’t be fading away anytime soon.
E-commerce platform Etsy has had a transformational 2020. It has evolved from a niche-based handicraft site to one that caters to a wide variety of users. Its unique offerings, excellent customer service and agile business model are well-positioned for continued success in the future. ETSY stock returned an incredible 335% over the past year.
Active buyers and sellers were up an impressive 76.7% and 61.7%, respectively. More impressively, its habitual buyers were up 157% year-over-year. Additionally, global merchandise volume of $10.3 billion was up 106.7% for the year. Etsy has laid the foundation for long-term success, and its expansion into other retail categories will lead to more sustainable growth.
Trupanion is the leading companion-pet insurance provider operating in the North American region. Its robust software can clear out payments to hospitals and veterinary clinics at checkout, a feature that helps it retain subscribers. TRUP stock has a strong record of consistently generating revenues and re-investing it to expand its business. With a significantly underpenetrated North American market, Trupanion has a substantial growth runway ahead.
From an earnings perspective, the company has posted stellar numbers in the past few years or so. In the past 53 quarters, it has posted revenue growth of over 20%, including a 35% growth in its most recent quarter.
Despite these growth numbers, a vast majority of the market remains untapped. There are an estimated 180 million cats and dogs in the North American region, of which only 1% to 2% are ensured. Therefore, there’s a massive addressable market that Trupanion could tap into to grow its business exponentially.
Chinese EV maker Nio is often referred to as the Tesla of China, and it has lived up to that moniker in many ways. 2020 has been a breakthrough year for the company as it experienced triple-digit growth in its revenue in the past three quarters. It has recorded sharp quarterly increases in its deliveries in the last year, a trend which should continue for the foreseeable future. Additionally, NIO stock has witnessed parabolic growth in the past year, with a 1,492% growth in its price.
Recent results have been weighed down by chip shortages, which led to production curtailments. Despite these weaknesses, Nio posted revenue growth of over 133.2% in its most recent quarter. It recently provided an update on first-quarter deliveries, which shot up 373% year-over-year to a record 20,060 vehicles. Therefore, strong deliveries and innovations in its BaaS (Backend-as-a-Service) program could pay massive dividends in the future.
Okta is a provider of cloud-based identity management solutions. It offers a unique set of features for its massive customer base in responding to threats to enterprise and consumer data. The stickiness of its platform is such that it has integrated with more than 7,000 enterprise applications. Hence, OKTA stock is among the cream of the crop as far as security stocks are concerned.
Revenue growth has been stellar for the company, given its double-digit growth in the past several quarters. Its revenues rose by a healthy 40% to $234.7 million in its most recent one, delivering a per share profit of 6 cents.
It recently acquired its competitor Auth0, in a deal valued at $6.5 billion. The deal will bolster its growth rates further and heighten exposure to external markets outside of the U.S. With the rampant growth of cybersecurity, I expect OKTA stock to continue posting healthy revenue numbers.
Lovesac is a modular furniture designer that has taken off significantly in the past couple of years. It’s unique in its functionality, offering modular furniture including “sactionals,” which account for the bulk of its sales. Despite the lower retail stores, it was able to pivot its business online and sustain most of its growth. In the past year, LOVE stock has grown over 1,353%.
Revenue growth has been nothing short of impressive for the company. From 2018 to 2020 it has posted double-digit growth numbers. Additionally, in fiscal year 2021, its nine-month revenue exceeded 35%. Sactionals, or its customizable furniture, account for roughly 80% of its sales and attract new customers.
Profitability has been a concern, but its year-to-date EBITDA (earnings before interest, taxes, depreciation and amortization) is an impressive $2.4 million, compared to an $11.7 million loss the year before. With several growth tailwinds ahead, expect great things from LOVE stock.
On the date of publication, Muslim Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Muslim Farooque is a keen investor and an optimist at heart. A life-long gamer and tech enthusiast, he has a particular affinity for analyzing technology stocks. Muslim holds a bachelor’s of science degree in applied accounting from Oxford Brookes University.