While it could be tempting to jump on the bandwagon and buy GameStop shares, it would be a dangerous game to play.
This is because when Reddit is finished with the games retailer, the buying pressure is likely to fade and its shares will trend towards their true value. Something which experts believe is significantly lower than where it trades today.
In light of this, these ASX growth shares could be the ones to buy if you're looking to build your wealth. Here's why:
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Nuix Limited (ASX: NXL)
The first growth share to look at is Nuix. It is a leading provider of investigative analytics and intelligence software. Nuix helps customers across the globe to process, normalise, index, enrich, and analyse data from different sources.
The company has a very strong reputation for good reason. Its software has played a key role in some of the most important investigations over the last decade. This includes the Panama Papers and the Banking Royal Commission.
Nuix has been performing very positively over the last 18 months and doesn't appear to have had its growth stifled by the COVID-19 crisis. In FY 2020, the company delivered a 25.9% increase in total revenue to $175.9 million. This was driven largely by its subscription revenues, which now account for 88.7% of its total revenue.
One broker that is a fan of the company is Morgan Stanley. Earlier this month it put an overweight rating and $11.00 price target on the company's shares. It believes Nuix is an attractive, long term, structural growth story.
Xero Limited (ASX: XRO)
Xero is one of the world's leading cloud-based business and accounting software platform providers.
It has been growing at a very strong rate over the last few years and even during the pandemic, despite its impact on small businesses.
For example, during the first half of FY 2021, Xero's subscriber numbers increased to 2.45 million. Thanks to this and an increase in average revenue per user, Xero reported a 21% increase in operating revenue to NZ$409.8 million and a 15% lift in annualised monthly recurring revenue (AMRR) to NZ$877.6 million.
Goldman Sachs has been impressed with its performance and believes it still has a very long runway for growth.
It recently initiated coverage on the company with a buy rating and $157.00 price target. Goldman believes Xero can achieve a 2030 subscriber footprint of 7.4 million and generate NZ$3.4 billion in annual revenue.
After which, it sees opportunities for Xero to monetise its app ecosystem and drive multi-decade strong growth.
