Investing in Volatile Growth Stocks for the Long Term

Warren Buffett once mentioned that buying stock means being ready for a price drop—50% or more—yet, still being okay with it. This advice rings particularly true when diving into volatile growth stocks, especially in emerging markets. If a company is set to see substantial growth in its market over the coming years, then holding the stock for just a few months might not be the best strategy.

Let’s explore three stocks that may be worth considering for their short-term fluctuations while also holding potential for long-term gains: Joby Aviation, AST Space Mobile, and QuantumScape.

Joby Aviation

Joby Aviation is leading the charge in the electric vertical takeoff and landing (eVTOL) aircraft sector. Their S4 model can accommodate a pilot and four passengers, travel up to 150 miles on a single charge, and reach speeds of 200 mph. After successful test flights in various countries, they aim to launch their first U.S. commercial flight once the FAA grants full certification.

Prominent companies like Toyota, Delta Airlines, and Uber are backing Joby. Toyota plans to aid in mass production, Delta intends to use the S4 for airport-to-home flights, and Uber will incorporate these flights into its app. Additionally, they manufacture eVTOLs for the U.S. Department of Defense.

The revenue projection for Joby is quite ambitious, with expectations of growth from $53 million to $458 million between 2025 and 2028 as they launch commercial flights. Although the company isn’t profitable yet and their current price seems steep at 20 times 2028 sales, there’s immense potential for growth if eVTOLs start replacing conventional helicopters.

AST Space Mobile

AST Space Mobile focuses on developing low-Earth orbit (LEO) satellites aimed at enhancing cellular connectivity. This initiative is expected to extend the network range for major players like AT&T and Verizon into rural areas lacking coverage by traditional towers. They’re also working on satellite technology for the U.S. Missile Defense Agency.

So far, the company has launched only seven satellites, but there’s a larger plan to expand to 45-60 by 2026, reaching up to 248 in subsequent years. The FCC has approved a long-term plan for this expansion, which is quite ambitious.

Revenue estimates for AST are impressive, too, with projections rising from $71 million to $1.88 billion between 2025 and 2028 as they grow their satellite network. They’re aiming for profitability in 2027 and 2028, showing a substantial upside, particularly as their sales are already forecasted to rise significantly.

QuantumScape

QuantumScape is innovating solid-state batteries tailored for electric vehicles (EVs). Their QSE-5 battery is designed to withstand higher temperatures, charge faster, and offer more capacity compared to conventional lithium-ion batteries. This development is in partnership with Volkswagen, a collaboration spanning a decade.

Initially, QuantumScape intended to manufacture its own batteries through a joint venture with Volkswagen. However, they’ve shifted gears to a more straightforward licensing model, allowing them to license technology to Volkswagen’s battery arm and create a consistent stream of revenue.

Valuing QuantumScape’s stock poses a challenge, as the company hasn’t yet made significant revenue. Still, analysts predict an increase in sales to $51 million in 2027 and $99 million in 2028 once their first battery enters the commercial space. Despite a high valuation at 43 times projected 2028 sales and potential ongoing losses, successfully commercializing solid-state batteries ahead of competitors could pave the way for substantial profits down the line.