• Tue. Nov 22nd, 2022

3 Growth Stocks Down 49.6% to 79.9% to Buy Now and Hold Forever

ByMadeleine J. Pierce

Sep 17, 2022

Whether you’ve been investing for decades or just starting out, this has been a tough year. The reference S&P500 the index lost more ground in the first half of 2022 than it had since 1970.

The thing to remember about market downturns is that bad stocks tend to fall just as easily as big stocks which can generate above-market gains. These three growth stocks have what they need to outperform over the long term, but they are down 51% to 80% from the record prices they hit last year.

Image source: Getty Images.


Shares of Shopify (STORE -6.26%) profited greatly from the surge in demand for online shopping when the pandemic kept us all at home. The former high-flyer is down more than 80% from his peak last year.

The bottom slumped under Shopify shares largely because investors feared the company’s ongoing transition from a primarily software company to one that also excels in fulfillment services like its commerce rival. electronic, Amazon. To that end, Shopify acquired Deliverr for $2.1 billion in July.

Deliverr is a fulfillment technology provider that enables two-day shipping for direct-to-consumer merchants. This will make it easier for more Shopify merchant partners to offer lightning-fast fulfillment services without handing over control of their customer relationships to Amazon.

Heavy investments to strengthen its distribution network, combined with a general slowdown in online shopping, led to losses on the net income of Shopify’s e-commerce activities in the first half of 2022. Investors will be happy to know that the company has ended June with nearly $7 billion. in liquid. This is more than enough to maintain the momentum of operations while general e-commerce activity catches up with the improved capacity of the business.

2. Duolingo

Duolingo (DOUOL -2.58%) the stock jumped during the strictest pandemic shutdowns, but has fallen by more than half since its peak last September. This language-focused education company has the most profitable education app on Applefrom the Google App Store and Play Store.

Learning a new language or revising an old one was one of the top activities for people with more free time during the strict COVID-19 restrictions. Investors worried that fewer people with more free time would hold back Duolingo’s rapid growth rate and hammered the stock without waiting for evidence.

You wouldn’t know it by looking at the stock price, but Duolingo’s app is always attracting new subscribers and retaining old ones. In August, the company reported second-quarter revenue that grew more than 50% over the year-ago period.

Duolingo’s relentless focus on improving its lessons in a way that encourages free users to become paid subscribers works. A whopping 25% of daily active users at the end of June were paid subscribers, up from 21% a year earlier. These impressive gains at a time when it should be even harder for online education companies to make year-over-year comparisons bode well for a bright future.

3.SoFi Technologies

Shares of Sofi Technologies (SOFI -5.62%) have fallen about 77% from the high point in early 2021. This company started refinancing student loans about a decade ago, and is now a full-service consumer bank with 4.3 million members who use 6.6 million products.

In addition to a full-service consumer banking operation, SoFi owns Galileo and its industry-leading application programming interface (API). When businesses want to create accounts and set up payment cards, they flock to the Galileo API, which activated 117 million accounts by the end of June.

SoFi is in high growth mode. It acquired Galileo in 2020 and another technology platform called Technisys in March. Despite significant investments to consolidate its unique position, the company has recorded positive earnings before interest, taxes, depreciation or amortization (EBITDA) for two consecutive years. The stock price can be volatile, but this well-run bank is designed to generate above-market earnings over the long term.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a board member of The Motley Fool. Cory Renauer holds positions at Duolingo, Inc., Shopify, and SoFi Technologies, Inc. The Motley Fool holds and endorses Amazon, Apple, and Shopify. The Motley Fool recommends the following options: January 2023 $1140 Long Calls on Shopify, $120 March 2023 Long Calls on Apple, $1160 January 2023 Short Calls on Shopify, and $130 Short Calls from March 2023 on Apple. The Motley Fool has a disclosure policy.