Investing in cryptocurrency has been a very risky investment that has more than paid off over the past decade. If you have invested in Bitcoin (BTC 3.92% ) in 2017, you would have had a return of over 5,000%.
Crypto still has a lot of room to operate, but I think these stocks could do better. Here is why I think that risk (RSKD -10.68% ), Pinterest (PINS -3.85% ), and Latch (LTCH -3.96% ) could outperform all cryptocurrencies over the next decade.
1. Riskified: making e-commerce safer
Riskified helps e-commerce businesses like Wayfair (W -7.80% ) identify and detect fraud using artificial intelligence. Riskified’s AI can detect large-scale fraud in seconds, which many e-commerce companies cannot. Its AI has been essential for its customers: the top 10 customers spend an average of 39% less on operating expenses while achieving 8% more sales with Riskified.
Riskified’s main competitive advantage is to assume all the risks of its decisions. If Riskified authorizes a fraudulent order, Riskified will pay its customer for the order. This chargeback guarantee eliminates all risk for ecommerce companies, giving them no reason not to use Riskified. As a result, Riskified has less than 2% customer churn, and its gross cargo volume (GMV) under management reached $ 21 billion, up 28% year-over-year.
The e-commerce market is expected to grow rapidly over the next three years, growing from $ 4.3 trillion in global GMV today to $ 6.4 trillion in global GMV by 2024. The company only had of $ 60 billion in annual GMV in 2020, so the market for the company is limitless. With such a big opportunity ahead of it and a major advantage that breaks down barriers for clients on board, I think Riskified’s business could grow massively over the next decade and reward shareholders along the way.
Although the business is not yet profitable, the opportunities it offers for e-commerce businesses and the low customer churn rate could lead to increased revenues in the future. If the business can capitalize on these factors, it could ultimately become a source of income.
2. Pinterest: Making ideas happen
Pinterest has nearly 30% of the US population on its platform, and now it’s working hard to monetize its users. The company has taken steps such as launching Pinterest TV, making it easier for the 89% of users who say they use Pinterest with the intention of buying items to complement their purchases.
Compared to other social media companies, Pinterest has barely scratched the surface of its opportunity. Snapchat ( BREAK -2.94% ) has an average revenue per user (ARPU) of $ 3.49 worldwide, and Meta-platforms‘ (FB -0.02% ) The worldwide ARPU is $ 10. Pinterest, however, only had a global ARPU of $ 1.41 in the third quarter. Indeed, Pinterest’s international ARPU was only $ 0.38, compared to $ 0.98 for Snap and $ 3.14 for Facebook.
The company has struggled to retain and grow its user base, but that’s not the primary focus of Pinterest. Yes, retaining users is important (you can’t monetize zero users), but the goal should be to increase the company’s ARPU. If the company can use their unique platform that users really want to be advertised on – which cannot be said about their competition – and dramatically increase their ARPU, I think the company could grow 10x from now on.
3. Latch: eye in the air for apartment managers
Latch provides software and smart locks that make it easy for apartment managers to keep their tenants safe. The real price is the software, which allows apartment managers to regulate tenant and guest access, monitor tenant movements, and manage deliveries. This unique software can only be used with its smart keyless locks, which have surprisingly high switching costs. This has resulted in zero customer loss since it started operating in 2017.
Latch makes deals with apartment managers even before apartments are built, so its partnerships with Avalon Bay (AVB 0.97% ) and other apartment builders are critical. These partnerships are what get Latch in the door, and they also partly explain why 30% of new apartment buildings under construction today will have Latch installed.
The company expects its 2021 revenue to be $ 40 million, which is a speck of dust compared to the addressable $ 54 billion market the company sees in the United States alone. . Even if the company generated 100 times its revenue over the next decade, the company would have less than 8% market share, demonstrating the leeway it still has. Latch is the only company to offer a complete suite of smart locks and software as well as high quality partnerships. If he can fully utilize these perks, Latch has the opportunity to grow a hundredfold from here and maybe even grow taller than that.
They might be down, but don’t rule them out
Despite all their potential, there are huge risks associated with every business. Riskified and Latch are young companies that have yet to prove their business models. While they have several advantages that set them apart, it will be essential for these companies to continue to innovate and improve their industries. Pinterest has been having a rough time, and if the company’s investments in new technology don’t increase monetization for the business, it could be the final blow.
Like Bitcoin in 2017, these stocks are high risk but offer a very high reward if they can be successful, and I believe their respective advantages will allow them to do so. These stocks are valued at high prices because of their great potential over the next decade.
All stocks have fallen from their highs making these stocks much cheaper, but still expensive. However, I think these reviews are worth paying for due to the huge chance of reward. If these companies can run their industries, they could generate returns that would crush any cryptocurrency over the next decade.
This article represents the opinion of the author, who may disagree with the âofficialâ recommendation position of a premium Motley Fool consulting service. We are motley! Questioning an investment thesis – even our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.