Sweet green (NYSE:SG) is a salad restaurant chain that went public in 2021. At the beginning of 2024, the price was almost 80% lower than when it went public. It seemed the investing community had no appetite for this salad stock. But 2024 was a completely different story. By November, the stock had more than tripled by 2024.
Sweetgreen shares gave up some gains to end the year. But it was still an impressive run. In addition, shares of Reddit (NYSE:RDDT) And IonQ (NYSE: IONQ) have had similarly impressive runs, with both stocks more than tripling in value by 2024.
Here’s why these three stocks did so well in 2024 and which one I think will do best in 2025.
Sweetgreen was a fast-growing company when it went public, but the losses were too great for investors. Management began addressing this issue in late 2023 by setting a vision for its Infinite Kitchen model. And investors appear to be buying into that view in 2024.
Infinite Kitchen is all about automation. Thanks to kitchen technology, salad bowls can be largely prepared by robotic machines. And this is a big problem.
Consider that in the first three quarters of 2024, the company spent 28% of its revenue on labor and related costs – its largest operating expense. If robotics can reduce these costs, it would have a major impact on the bottom line.
The Infinite Kitchen vision is only now reaching an early turning point. Sweetgreen started its third quarter with just two restaurant locations of the 225 equipped with automation improvements. But by the end of the third quarter, there were ten restaurants with the Infinite Kitchen. As this increases in 2025 and beyond, investors are hopeful that profits will rise, which is why the stock jumped in 2024.
Sales growth is slowing as the company focuses on profits; it is opening new restaurants more slowly. But earnings before interest, taxes, depreciation, and amortization (EBITDA) are already rising, and the Infinite Kitchen tailwind hasn’t even really started yet.
The 224% jump for Reddit stock is particularly impressive considering the company didn’t have all year to work with; the initial public offering (IPO) took place in March. But the company’s financials are simply too impressive to ignore.
Over the past two years, the social networking company’s revenue growth has accelerated – which is a relatively rare investment opportunity. In the third quarter, revenue grew 68% year over year to $348 million. In short, millions of new users have been added and demand for advertising has increased, leading to excessive growth.