Anticipated Increase: Two Stocks Likely to Surpass Coca-Cola or Disney's Value in a Decade
A handful of corporations worldwide have stood the test of time and prosperity like none other, such as The Coca-Cola Company (KO losing 0.19%). Their trademark drink originated in 1886, and their company logo is reportedly recognized by a staggering 94% of the globe's population today. Their monstrous size is evident in their $270 billion market capitalization.
Established in 1923, The Walt Disney Company (DIS losing 0.89%) may not have the extensive history of Coca-Cola, but its reach is just as wide. According to the Los Angeles Times, more individuals are familiar with Mickey Mouse than Santa Claus. It's no wonder that this company has also reached a substantial market cap of over $200 billion.
Despite the grandeur and iconic status of Coca-Cola and Disney, newer companies could surpass them in value. Although this may sound improbable, both companies boast slow growth, implying their respective market valuations are increasing gradually, allowing swifter-growing companies to gain ground.
I anticipate that after a decade, MercadoLibre (MELI losing 0.42%) and Airbnb (ABNB losing 1.43%) could surpass the value of Coca-Cola and Disney. Here's why:
1. MercadoLibre: $88 billion market cap
To surpass Disney, MercadoLibre needs to swell by approximately 130%. To surpass Coca-Cola, the company must grow by around 210%. I believe it's not unreasonable to see MercadoLibre overtaking Disney within the next five years, and eventually surpassing Coca-Cola within the next decade.
MercadoLibre currently holds the leading e-commerce platform for Latin America, but there are opportunities to expand its market share in this fast-growing sector. Last year, the company launched a loyalty program called Meli+, offering perks and incentives that many competitors don't. This provides motivation to opt for MercadoLibre over its rivals.
One of the advantages of MercedoLibre's loyalty program is free shipping. This is made possible thanks to its extensive logistics network, which MercadoLibre has spent years building. It now offers free and fast shipping for many products, a significant draw for users.
In terms of additional opportunities, MercadoLibre's extensive e-commerce presence allows it to venture into the profitable business of advertising. For instance, Amazon launched advertising services relatively recently, bringing in $5 billion in Q3 2020, which is projected to rise to well over $14 billion by Q3 2024. MercadoLibre's advertising revenue may not reach these numbers, but the growth trajectory will likely follow a similar path.
To achieve the necessary growth to propel MercadoLibre's market cap beyond $200 billion, e-commerce, logistics, loyalty programs, and advertising are promising enough on their own. However, MercadoLibre also has a thriving financial technology sector, with all its metrics growing at robust double-digit rates as well.
In conclusion, MercadoLibre operates in a variety of high-growth sectors. As we look 10 years into the future, I remain confident that MercadoLibre could be worth $300 billion or more.
2. Airbnb: $81 billion market cap
To surpass Disney, Airbnb needs to climb by approximately 152%. To surpass Coca-Cola, the company must rise by around 237%. Although Airbnb must surge by a larger percentage, I believe it can still reach those heights within a similar time frame due to its abundant opportunities.
Airbnb's co-founder and CEO, Brian Chesky, recently stated that the company expects to launch one to two new businesses that will generate $1 billion or more in revenue incrementally each year over the coming years. Some of these ventures could be in the realm of travel software and tourism experiences, but not all will necessarily be related to travel.
While investors should maintain realistic expectations, I find the high-upside strategy particularly stimulating.
Airbnb is embarking on a series of ambitious ventures aimed at generating billion-dollar revenues over the next decade. Many of these ideas will likely fail, but the likelihood of success increases with the quantity of attempts. Regarding the potential to surpass Coca-Cola or Disney in value, I believe that Airbnb will ultimately come up with something that will enable it to surpass these giants.
Airbnb's core business remains robust, allowing for exploration in various areas. For context, 123 million nights and experiences were booked on the platform during Q3 2024 alone, generating $3.7 billion in revenue at a 29% free-cash-flow margin. Over the past five years, Airbnb's revenue has more than doubled, and its free cash flow has soared.
In essence, my investment case for Airbnb is built upon the foundation of a robust and growing core business and strong financial footing. This alone represents an upside potential for shareholders. However, the company is also utilizing its financial strength to experiment with numerous adjacent opportunities. If even one of these experiments is successful during the next decade, I believe this could provide the additional push needed to surpass even Coca-Cola's value.
Over the long term, growth is an essential component of investing. Examining MercadoLibre and Airbnb, it's evident that a significant acceleration in growth will unfold during the next decade. This is why I believe both could surpass the value of Coca-Cola and Disney, making them top investments in my portfolio.
In the realm of finance and investing, analysis of potential growth is crucial. MercadoLibre, with a current market cap of $88 billion, could see a surge in value if it manages to expand its market share in the fast-growing e-commerce sector and capitalize on opportunities such as advertising. Similarly, Airbnb, currently valued at $81 billion, could surpass both Coca-Cola and Disney if it successfully launches new businesses and experiments that generate billion-dollar revenues, leveraging its robust core business and strong financial footing.
