#17 2021 Stock Predictions 🔮
10 predictions for next year, including Amazon and nine other high-growth stocks
In my last post I shared the results from the 2020 stock predictions I made at the end of 2019. If on 1/1/20 you invested $100k into the stocks I predicted increasing, your portfolio would be worth ~$348k at the end of 2020.
Since I enjoyed the number crunching and pre/post rationalization, I’m going to repeat the exercise for next year but with a couple changes:
I’ll increase my prediction list from 5 to 10, excluding the ones from last time.
I’ll only make predictions about stocks I think will go up; predicting decreases isn’t as fun as predicting increases.
Here are my 10 stock predictions for 2021, ranked by largest current market cap to lowest.
2021 Stock Predictions 🔮
Disclaimer: I am not a financial advisor and this is purely speculative. Do not trade based on my predictions. I’m not responsible for your investment decisions.
“Amazon.com, Inc. engages in the provision of online retail shopping services. It operates through the following business segments: North America, International, and Amazon Web Services (AWS).”
AMZN is currently trading at $3,171/share — $1.6T market cap.
I predict it will be trading above $4,000/share at the end of 2021 (+26%)
Amazon is a giant that doesn’t show any signs of slowing down. Its dominance in online commerce will continue as the Prime subscriber base expands in 2021 in a world with recovering consumer confidence as COVID comes to an end but offices and schools are slow to re-open. Amazon’s acquisition of Whole Foods is shaping up to be a genius move by Jeff Bezos. As more businesses go online, Amazon’s AWS business will grow dramatically in 2021. Amazon net income in the three months ending 9/30/20 was $6.3bn, triple the $2.1bn income it posted during the same quarter a year earlier. I see Amazon joining Apple in the $2 trillion club by the end of 2021.
“salesforce.com, inc. engages in the design and development of cloud-based enterprise software for customer relationship management. Its solutions include sales force automation, customer service and support, marketing automation, digital commerce, community management, collaboration, industry-specific solutions, and salesforce platform.”
CRM is currently trading at $225/share — $206.6B market cap.
I predict it will be trading above $275/share at the end of 2021 (+22%)
Salesforce’s recently announced acquisition of Slack for $27.7B is a serious statement of intent to go head to head with Microsoft and other enterprise software giants in 2021. With deep pockets and an incredible loyal customer base - Salesforce is extremely sticky once companies integrate - I’m betting on the company to continue growing aggressively under Marc Benioff’s leadership next year. For the quarter ending 10/31/20, Salesforce showed strong results relative to the same period the prior year: $1.1bn net income (2020) vs $109mm net loss (2019). COVID has clearly been a positive for the company.
“Shopify, Inc. operates a cloud-based commerce platform designed for small and medium-sized businesses. Its software is used by merchants to run business across all sales channels, including web, tablet and mobile storefronts, social media storefronts, and brick-and-mortar and pop-up shops.”
SHOP is currently trading at $1,226/share — $149.4B market cap.
I predict it will be trading above $1,500/share at the end of 2021 (+22%)
With COVID speeding up digital transformation by 6 years, Shopify is well-positioned to serve the large ecosystem of merchants who were used to conducting business offline and will now be making the transition to online commerce. Shopify’s merchant solutions revenue grew more than 100% y/y, increasing from $225mm in Q3 ‘19 to $522mm in Q3 ‘20. I expect this trend to continue next year.
“Spotify Technology S.A., also called Spotify, is a digital music service offering music fans instant access to a world of music. The company operates through the following segments: Premium and Ad-Supported.”
SPOT is currently trading at $328/share — $60.4B market cap.
I predict it will be trading above $450/share at the end of 2021 (+37%)
Spotify signed a multi-year exclusive licensing deal with Joe Rogan this year, which was valued at around $100mm. With Rogan’s monthly downloads estimated at ~200 million, this will be a massive boost to Spotify’s user base. As a listener of Joe Rogan myself, I recently switched most of my podcast subscriptions to Spotify as my go-to podcasting app. I’ve listened to (podcast) interviews with Spotify’s 37-year old CEO Daniel Ek that demonstrate a very deliberate and strategic vision for the future and I see 2021 as a big growth year for the company.
“Atlassian Corporation Plc Class A Ordinary Shares, also called Atlassian, is a holding company, which engages in the design, development, license, and maintenance of software and provision software hosting services. Its products include JIRA software, align, core, and Service Desk, Confluence, Trello, Bitbucket, Sourcetree, bamboo, opsgenie, and statuspage.”
TEAM is currently trading at $242/share — $60.25B market cap.
I predict it will be trading above $300/share at the end of 2021 (+24%)
Atlassian makes enterprise-grade collaboration software, including Jira and Confluence. While many Jira users like to complain about it, the product is incredibly reliable for large software development teams. The seamless integration between Jira and Confluence make the combination a very sticky toolkit for massive teams, as well as fast-growing startups. I’ve used Jira extensively as a product manager at my last three companies and I’ve only seen companies switch to Jira, but never away from Jira. The two young Australian co-founders and co-CEOs will continue growing the company aggressively in 2021 to capitalize on the remote work ecosystem becoming more of a default at many large companies.
“Twilio, Inc. engages in the development of communications software, cloud-based platform, and services. Its platform consists of the following layers: engagement cloud, programmable communications cloud, and super network.”
TWLO is currently trading at $363/share — $54.8B market cap.
I predict it will be trading above $500/share at the end of 2021 (+38%)
Twilio’s recently announced acquisition of Segment for $3.2B is the largest to date (their biggest one until this was SendGrid in 2018 for $3B). Segment has exploded in recent years to create the “customer data platform” space and as a user of Segment in two of my recent roles, I know how valuable Segment becomes for teams that need to maintain a source of truth for customer data. I see Segment becoming worth $10B in the next few years and see the market pricing this into Twilio’s price in 2021. In addition to Segment, Twilio’s bread-and-butter communication infra business is growing rapidly, with many companies relying on Twilio’s to power their customer communications.
“Peloton Interactive, Inc. operates at-home fitness platform for live and on-demand indoor cycling classes. The company pioneered connected, technology-enabled fitness, and the streaming of immersive, instructor-led boutique classes for its Members.”
PTON is currently trading at $163/share — $47.6B market cap.
I predict it will be trading above $200/share at the end of 2021 (+23%)
I am not a cyclist. I’m also not a home exercise enthusiast. I like outdoor exercise, primarily through hiking in nature and long walks with George. That said, Peloton has become one of those products a lot of people absolutely love. Given the high price point, it’s one of those purchases that pressures people psychologically to use it. And once people use it, they develop the habit. Before they know it, they’re addicted. While I’m confident gyms will re-open at scale in 2021, my bet is that many of the people who purchased Pelotons in 2020 will continue being avid users and that the shift from cities to suburbs for a lot of high earners will provide them additional home space, some of which they will choose to fill with a Peloton. Peloton doubled total revenue in 2020 while reaching an adjusted positive EBITDA for the first time. I think they’ve figured out a model that they’re going to scale nicely in 2021.
8. Unity Software
“Unity Software, Inc. develops video gaming software. It provides software solutions to create, run and monetize interactive, real-time 2D and 3D content for mobile phones, tablets, PCs, consoles, and augmented and virtual reality devices.”
U is currently trading at $166/share — $44.7B market cap.
I predict it will be trading above $225/share at the end of 2021 (+36%)
The global games market is expected to grow from $175bn in 2020 to $218bn in 2023 and Unity’s tools will be essential for game developers. Unity’s comprehensive solutions allow developers to create and operate interactive games. If augmented reality, virtual reality, and digital gaming will grow in 2021, buying Unity stock will provide exposure to this trend.
“Smartsheet, Inc. engages in the design and development of cloud-based platform for work management. It offers ways for customers to plan and manage their work using grids, projects, cards, and calendars.”
SMAR is currently trading at $72/share — $8.9B market cap.
I predict it will be trading above $100/share at the end of 2021 (+39%)
After a few months of working remotely last year, I realized that remote teams rely on digital tooling for planning more than in-office teams. I’ve used Smartsheet’s tools at a couple of my old jobs, primarily for project Gantt charting. It’s an incredibly useful tool for getting many stakeholders aligned around dependencies and timelines. With over 90% of its revenue coming from subscriptions, Smartsheet’s enterprise sales model has very high gross margins. While the company shows losses due to high operating expenses primarily from sales & marketing and research & development, I believe that Mark Mader (President and CEO for the past 15 years) is the right person to lead the company into the next stage of growth.
10. Compass Pathways
“COMPASS is a mental health care company dedicated to accelerating patient access to evidence-based innovation in mental health. Our first programme is researching how psilocybin therapy could help people with treatment-resistant depression.”
CMPS is currently trading at $55/share — $2.0B market cap.
I predict it will be trading above $75/share at the end of 2021 (+36%)
A few years ago, I started getting very interested in mental health. I’ve been to therapy myself on several occasions and found it valuable, but quite expensive. My therapy engagements have typically been for 3-4 sessions every few years, which brings the cost significantly down. However, many people needs more regular support, seeing therapists on a weekly basis for multiple years. This cost structure doesn’t seem sustainable. Psychedelic-assisted therapy is a breakthrough model. One psychedelic therapy session can equal years or even decades of regular therapy. Compass Pathways is an early leader in a space that I believe will grow significantly over the coming decade and with its own proprietary psilocybin compound COMP360, is trailblazing a new path for mental healthcare.
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