Three tech companies showing greater growth potential than any digital currency available.
Daring investors looking to explore beyond traditional markets might consider high-growth tech stocks with established foundations instead of betting on the volatile world of cryptocurrencies. Here are three intriguing options that could outperform cryptos in the upcoming years: Reddit (RDDT), Rocket Lab USA (RKLB), and Innodata (INOD).
The unconventional social media powerhouse: Reddit
Reddit, a platform that seamlessly blends news aggregation, discussion, and social media features, has captured the online community's heart. From the end of 2021 to the third quarter of 2024, its daily active unique users soared by an impressive 82.8% to 97.2 million. This remarkable growth can be attributed to significant political events, major news stories, and buzzworthy movie and game releases.
In 2023, Reddit's revenue rose by 21% to $804 million, with a notable improvement in adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) from -$109 million to -$69 million. But it's not stopping there—Projected revenue for 2024 is expected to surge by 56% to 58% to a staggering $1.3 billion, with a positive adjusted EBITDA of $254 million to $269 million.
What drives such growth? Consider Rocket Lab's strategic partnerships with Alphabet's Google search engine and OpenAI's ChatGPT, both of which could widen its user base. At a $30 billion enterprise value, Reddit might seem pricey (23x 2023 sales, 115x EBITDA), but its impressive growth, competitive advantages, and profitability make these premium valuations somewhat justifiable.
A high-flyer in the space industry: Rocket Lab USA
Located in Long Beach, California, Rocket Lab produces partially reusable rockets for NASA, the U.S. Space Force, and other prominent clients. While its 2023 revenue only climbed by 16%, analysts see growth of 77% to $434 million by 2024. The company has launched its flagship Electron orbital rocket 58 times over the past seven years, and the forthcoming Neutron aims to carry up to 15 metric tons when it takes off later this year.
While Rocket Lab is expected to remain in the red over the following years, its $15 billion enterprise value is nearly 35 times its projected 2024 sales. However, its unique mix of customers and assured growth could help scale its business over the next decade and justify the staggering valuations.
The AI sleeper: Innodata
Previously known as an IT software and services provider with slow growth, Innodata stepped up its game in 2018 with a suite of microservices to boost artificial intelligence readiness. Now, the 'Magnificent Seven' companies are utilizing these services to enhance their AI-focused data. As a result, Innodata's sales climbed at a 12% compound annual growth rate (CAGR) from 2019 to 2023.
Analysts anticipate Innodata's 2024 revenue to soar by 89% to $164 million, generating a net profit of $23 million for the year, contrasting its net loss of $0.9 million in 2023.
Innodata is still fairly reasonably valued (7.8x 2023 sales, 55x 2023 earnings), yet it could ascend even higher as the booming generative AI market expands over the next few years.
In terms of finance and investing, the impressive growth of Reddit's revenue and projected earnings make it an attractive option for daring investors seeking high returns, with its premium valuations somewhat justifiable due to its competitive advantages.
For those interested in the space industry, Rocket Lab USA's strategic partnerships and assured growth could justify its high enterprise value, as its unique mix of clients provides a strong foundation for future revenue growth.
