The digitization accelerated by the pandemic of the global economy has brought to the fore several new avenues of wealth creation.
While rising inflation and the Federal Reserve’s anticipation of rising interest rates have made short-term investors nervous, it’s not a big deal for long-term investors. Historically, investors who have been able to remain patient through massive sell-offs and market corrections have benefited significantly from the capitalization power of the stock market in the long run.
If you have $ 10,000 of capital that is not needed to pay bills or create an emergency fund, the following digitization-focused actions could help you increase that investment to $ 50,000 by now. 2030.
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Online mobile gaming platform actions Skillz (NYSE: SKLZ) fell 30.2% last month. However, this withdrawal presents a unique entry opportunity to buy shares of this high margin, debt free gaming company.
Skillz operates a software platform that hosts multiple skill (not chance) games from multiple game developers. By not hosting games of chance, the company has succeeded in reducing its regulatory challenges related to love daily fantastic sports and online sports betting. This gaming platform stands out from competetion because players can bet on these games for cash prizes, which makes them more attractive than free games. The company invoices 15% of gross product paid by players for his services.
The software platform has shown great scalability, which is reflected in the company’s gross margin over the last 12 months of close to 95%. Skillz is now focusing on adding more turn-based multiplayer games and investing in synchronous technology (allowing multiple players to play simultaneously) to add more profitable games, such as first-person shooters and real time strategy games. Expanding its game portfolio, both in terms of number of games and genres, increases the chances of delivering multiple hits, which in turn can improve the company’s finances.
With second quarter results scheduled for Aug. 3, the short-term stock price path will depend on factors such as exceeding analyst estimates, changes in its outlook for fiscal 2021 and its paying user base, and developments future of international market expansion and partnerships. However, in the long term, the company has strong potential to increase its paid user base as it currently represents only 17% of the total user base. The recent acquisition of demand side advertising platform Aarki should reduce the company’s customer acquisition expenses and, subsequently, its losses. The company’s multi-year gaming deal with the National Football League will also help attract new users at much lower costs.
In this context, the title seems well placed to become a generator of wealth in the years to come.
Another revolutionary stock that can easily reach $ 10,000 to $ 50,000 by 2025 is the advanced content delivery network and cybersecurity player, Cloudflare (NASDAQ: NET). The company positions itself as “Cisco as a Service”, in which a software-based network service is used to replace all types of network hardware such as routers, firewalls, VPNs and balancers. charged. Cloudflare currently offers network services in over 200 cities and 100 countries.
With an edge-based network architecture to perform data and compute in a localized data center closer to the user instead of a centralized data center, Cloudflare’s network is inherently fast, reliable and safer. The company’s software-defined network (SDN) model has made its network highly scalable and less expensive than peer-to-peer hardware networks such as Akamai Technologies and Flagship networks. Cloudflare now expects its total addressable market from $ 72 billion in 2020 to $ 100 billion in 2024.
The company’s freemium strategy of offering its services for free to individual users and then leveraging the knowledge gained to develop high-end products for businesses has paid off. At the end of the first quarter (ending March 31, 2021), the company’s total number of customers (free and paid customers) increased 46% year-over-year to 4.1 million, while its number of major customers (annual spend over $ 100,000) was up 70% year-over-year to 945.
The large customer cohort has become the fastest growing cohort and accounts for more than half of the company’s total revenue. In addition to acquiring new customers, Cloudflare’s existing customers are also purchasing more of its products, as evidenced by the first quarter net dollar retention rate of 123% (the same customers spent 23% more dollars in the first quarter). first quarter compared to spent in the same quarter of the previous year).
Cloudflare currently guides for 2021 revenue from $ 612 million to $ 616 million, implying a 42% year-over-year increase midway through. The business is not yet profitable, but the finances are moving in the right direction. Based on a highly scalable SDN model, a large addressable marketplace and a partnership with Nvidia To imbibe artificial intelligence capabilities in its edge network, Cloudflare is a solid long-term choice for retail investors.
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3. Limited sea
Based in Singapore Limited sea (NYSE: SE) rapidly expanded its three business segments – e-commerce (Shopee), digital entertainment (Garena) and digital financial services (SeaMoney and ShopeePay) – in Southeast Asia, Taiwan and Latin America.
Digital entertainment (involving the development and publishing of games) is the only lucrative business and the main source of cash for the business. The strength of Sea’s game portfolio is evident, given that its in-house developed game Free fire was the most downloaded game in the world in 2020. Free fire, the company also distributes several Tencent‘s (OTC: TCEHY) popular games. Although Sea pays royalties to Tencent, this distribution activity has also helped expand the company’s game user base. The company’s quarterly active digital entertainment users climbed 61% year-on-year to 648.8 million, while quarterly paid users grew even faster at 124% year-on-year to 79.8 million on the year. end of the first quarter (end March 31, 2021).
With the gaming industry helping to control its overall losses, Sea has focused on expanding the market share of its Shopee e-commerce platform. While not yet a profitable business, gross orders on Shopee jumped 134.6% year-on-year to $ 1 billion and the gross value of orders processed on the platform increased by 112.5% year-on-year to $ 11.9 billion in the first quarter. Shopee continues to dominate the Indonesian e-commerce sector, which is expected to grow faster than the Indian e-commerce market. In Q1, App Annie ranked Shoppe as one of the top apps on Android platforms in Southeast Asia and Taiwan in the shopping category based on average monthly user count and total time spent. . Shopee is also making a rapid breakthrough in Brazil.
Finally, although digital financial services are currently only a small part of Sea’s revenue mix, they are growing at a rapid pace. In the first quarter, the number of quarterly paid users for the company’s mobile wallet grew 145% year-over-year to more than 26.1 million.
In the context of a diversified business model benefiting from several structural favorable winds, Sea Limited offers an attractive risk-return proposition to retail investors.
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Manali Bhadé has no position in any of the stocks mentioned. The Motley Fool owns shares and recommends Nvidia, Cloudflare, Inc, Sea Limited, Skillz Inc. and Tencent Holdings. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.