The Motley Fool

Facedrive (TSX:FD) Stock Is up 200% in 2021: Should You Buy, Sell, or Hold?

Image source: Getty Images

Investing in quality growth stocks is perhaps the most effective way to create long-term wealth. Investors need to identify companies that have multiple growth drivers, secular tailwinds, and an expanding addressable market. These companies are well poised to generate market-thumping returns and consistently beat the broader market.

Let’s take a look at one such stock on the TSX that has gained significant momentum recently.

Facedrive stock has more than tripled year to date

Shares of ride-sharing company Facedrive (TSXV:FD) have been on an absolute tear ever since it went public back in September 2019. Since its IPO, Facedrive stock has gained a staggering 2,240%, and it has returned over 200% in 2021 as well. This means a $1,000 investment in Facedrive IPO would be worth $23,400 today.

Facedrive is a ride-sharing platform that is committed to providing green transportation solutions for drivers and riders. Earlier this month, it launched Steer, which is a high-growth electric vehicle subscription service and is expected to be an integral part of Facedrive’s TaaS (transportation-as-a-service) vertical.

The service has been launched in Toronto and is scheduled to begin in the first week of March. Steer is a U.S.-based monthly subscription service and was acquired by Facedrive. This acquisition should complement Facedrive’s original ride-sharing and food-delivery services.

Steer is backed by Exelon, which is a Fortune 100 company and the largest producer of clean energy south of the border. In fact, Steer was created with an aim to challenge traditional car ownership and accelerate the switch towards eco-friendly transportation.

The automotive subscription services market is projected to grow by US$9.15 billion between 2020 and 2024. According to Facedrive’s press release, “Steer has achieved multi-million annual recurring revenue in less than 12 months of operation.”

Facedrive Foods is another growth driver

Last year, Facedrive entered the food-delivery vertical after its acquisition of FoodHwy’s and Foodora’s assets. Facedrive Foods is experiencing robust growth with 4,100 meal deliveries per day on average.

It has partnered with 4,425 restaurants in Canada and has a user base of 250,000. The food-delivery platform is operational in 19 Canadian cities, including Toronto, Montreal, and Ottawa with further expansion plans in other regions as well as in the U.S.

Facedrive Foods has managed to take advantage of the shift in buying patterns and consumer behaviour in the wake of the COVID-19 pandemic. As people are largely staying at home, food-delivery companies have experienced a massive surge in demand.

Facedrive Food has now expanded into similar verticals including grocery delivery services as well as connecting supermarkets and convenience stores to the end customer. It now intends to launch a subscription service for loyal customers where they can benefit from cost savings over a period of time.

What’s next for investors?

Facedrive is expanding at a rapid pace. However, this growth needs to be sustainable as well as profitable. In the first nine months of 2020, it generated less than $800,000 in total sales, and given Facedrive’s current market cap of $4.57 billion we can see the company is trading at an extremely steep valuation.

It might take several years for Facedrive to turn profitable which means it cannot afford to have even a single quarter of less-than-impressive sales. Investors should brace for a ton of volatility in Facedrive stock in the upcoming months. Alternatively, investors with a high-risk appetite may also view a major correction in the stock as a buying opportunity.

Are you a fan of growth stocks like Facedrive?

This Tiny TSX Stock Could Be the Next Shopify

One little-known Canadian IPO has doubled in value in a matter of months, and renowned Canadian stock picker Iain Butler sees a potential millionaire-maker in waiting...
Because he thinks this fast-growing company looks a lot like Shopify, a stock Iain officially recommended 3 years ago - before it skyrocketed by 1,211%!
Iain and his team just published a detailed report on this tiny TSX stock. Find out how you can access the NEXT Shopify today!

Click here to discover how!

Fool contributor Aditya Raghunath has no position in any of the stocks mentioned.

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss an important event.

Iain Butler and the Stock Advisor Canada team only publish their new “buy alerts” twice a month, and only to an exclusively small group.

This is your chance to get in early on what could prove to be very special investment advice.

Enter your email address below to get started now, and join the other thousands of Canadians who have already signed up for their chance to get the market-beating advice from Stock Advisor Canada.

I consent to receiving information from The Motley Fool via email, direct mail, and occasional special offer phone calls. I understand I can unsubscribe from these updates at any time. Please read the Privacy Statement and Terms of Service for more information.