The gains that early Tesla stock investors generated are legendary. Since going public in 2010, Tesla has gone up by around 25,000%, turning every $5,000 invested into more than $1m!
In the early years, Tesla’s ambition to shake up the car industry was seen by most as fanciful, at best. But driven forward by its very unconventional CEO Elon Musk, it went on to become a $1trn company.
Quirkiness
Unfortunately, I didn’t invest in Tesla back in the early days. But I’ve noticed a similar thread of unconventionality running through many of my best stock investments.
Take Axon Enterprise, for example, which is my largest holding after rocketing 750% in the past five years. The company’s mission? To make the bullet obsolete (through its Tasers). Not exactly a traditional corporate goal!
Axon’s focus on solving customers’ problems is relentless. CEO Rick Smith once hosted a live quarterly earnings call from the back seat of a police car, while out on patrol with a law enforcement customer. That was quirky.
Or consider Games Workshop from the FTSE 100. It does no acquisitions or earnings calls with analysts focused on the next quarter. No rah-rah investor updates. Just a laser focus on one niche goal: to make the best fantasy miniatures in the world, profitably, forever.
One of my newer holdings – Nu Holdings – is a digital bank in Latin America. It launched its purple credit cards across Brazil precisely because purple was considered the most “anti-bank” colour possible. I like that disruptive mentality.
Embracing weirdness
This brings me to Duolingo (NASDAQ: DUOL), the world’s most downloaded language-learning app, which I invested in a few months ago.
The firm’s mission is to “develop the best education in the world and make it universally available“. It made great strides towards that goal in Q1, which saw daily active users soar 49% to 46.6m. Revenue jumped 38% to $230.7m, while net profit rose to $35.1m, from $27m.
As one of those daily active users (and a paid subscriber), I can testify to what Duolingo calls its “healthy dose of weirdness”. This includes a motley cast of cartoon characters and unhinged social media campaigns. And the app’s mascot, a peculiar green owl, which sends learners guilt-tripping push notifications.
In November, Duolingo really cranked up the quirkiness when Lily — its sassy artificial intelligence (AI)-powered, emo teenage character — actually opened the company’s earnings call with Wall Street analysts. That was a first, but exactly the sort of thing I like to see!
Duolingo’s stock isn’t cheap, and it’s facing potential competition from Google, which is a big risk to be aware of. But it has all the hallmarks of a winning investment to me, and I think it’s worth considering for long-term investors, especially on dips.
Aiming for better than average
We are willing to be misunderstood for long periods of time.
Amazon founder Jeff Bezos
These quirks might sound irrelevant. And they obviously don’t show up on the balance sheet or income statement. But I believe they’re a big part of why some growth companies are wildly successful.
So this is something I specifically like to see in most of the growth companies I invest in. Something distinctive about the firm or its corporate culture.
After all, unusually good returns will rarely be delivered by average companies.
