Rising interest rates and macro headwinds have caused a mass exodus of investors from hypergrowth stocks in recent years. Nevertheless, this sell-off has offered a silver lining, as valuations of many of these stocks have become more reasonable.
For investors with the ability to ignore short-term turbulence, the potential for substantial revenue growth makes companies like Lucid Group (NASDAQ: LCID), Symbotic (NASDAQ: SYM), and CrowdStrike (NASDAQ: CRWD) highly appealing.
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Lucid Group: A Charge Towards Potential Revenue Growth
Since its public debut through a special purpose acquisition (SPAC) merger in 2021, Lucid’s stock has plummeted approximately 90%. The luxury electric vehicle (EV) manufacturer suffered a significant setback as it fell short of its production targets.
Initially, a promise to produce 20,000 Air sedans in 2022 and 49,000 sedans in 2023 resulted in only 7,180 sedans in 2022 and 8,428 sedans in 2023. Lucid attributed this sluggish performance to supply chain constraints and other macro headwinds. Nevertheless, the company remains optimistic about ramping up production with expansions to its AMP-1 plant in Arizona and a new AMP-2 plant in Saudi Arabia. Additionally, the company plans to introduce its second vehicle, the Gravity SUV, this year.
Lucid holds strong backing from the Saudi Arabian government, which owns over 60% of its shares through its Public Investment Fund (PIF). Analysts anticipate a staggering compound annual growth rate (CAGR) of 148% in its revenue, projected to leap from $618 million in 2023 to $3.8 billion in 2025. This suggests the stock could be severely undervalued at a mere six times next year’s sales. Despite being deeply unprofitable, the company claims it has enough cash to sustain operations through 2025. Successful production ramp-up promises to catapult its revenue even further from 2025 to 2030, potentially steering the stock towards significant multibagger gains.
Symbotic: Revolutionizing Warehouse Automation
Symbotic specializes in providing warehouse automation services for large retailers. It asserts that the installation of just one of its $50 million modules, comprising robots and software, can yield $250 million in lifetime savings spanning 25 years.
In its fiscal year 2023, Symbotic derived 88% of its revenue from Walmart, a key investor. The company, however, is diversifying its customer base by forging new automation agreements with retail giants like Target, Albertsons, C&S Wholesale, and GreenBox — a warehouse-as-a-service joint venture established with another major investor, SoftBank. This expanding network of collaborations positions the company to establish a substantial lead in the fragmented warehouse automation market.
Symbotic entered the public arena through a SPAC merger and has witnessed a 130% surge in its stock since its debut in 2022. While the stock may not look inexpensive at 15 times this year’s sales, it displays significant potential for growth. Analysts project its revenue to grow at a CAGR of 44%, from $1.2 billion in fiscal 2023 to $3.5 billion in fiscal 2026. Its potential for continued expansion is underscored as more retailers opt for complete warehouse automation.
CrowdStrike: Pioneering Cloud-Native Security
CrowdStrike operates as a cloud-native cybersecurity firm, eliminating the need for expensive, space-consuming, and challenging-to-scale on-site appliances.
Since its IPO in 2019, CrowdStrike has leveraged its first-mover advantage in the cloud-native security space, achieving vigorous expansion. From fiscal 2018 to fiscal 2023, it realized a staggering 80% revenue CAGR. Analysts foresee its revenue to maintain a 31% CAGR, increasing from $2.2 billion in fiscal 2023 to $5.0 billion in fiscal 2026.
This growth is attributed to its amplified market share and the mounting adoption of its cloud-based modules. The latest quarter evidenced that 42% of its clients had adopted at least six of its modules, a notable increase from 36% just a year earlier.
Even if CrowdStrike sustains a more modest CAGR of 25% from fiscal 2026 to fiscal 2030, it could potentially generate over $12 billion in revenue by the end of the decade. The company is also likely to bolster its suite of cloud-based services through strategic acquisitions. Although the stock has surged by nearly 190% over the past 12 months and appears relatively expensive at 20 times next year’s sales, its supremacy in the cloud-native cybersecurity domain justifies its premium valuation.
Leo Sun maintains positions in CrowdStrike. The Motley Fool holds positions in and recommends CrowdStrike, Target, and Walmart. It has a disclosure policy.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
