Whether you’ve been investing for decades or are just starting out, this has been a tough year. benchmark S&P 500 The index lost more ground in the first half of 2022 than it has since 1970.
The thing to remember about market downturns is that bad stocks tend to fall just as easily as great stocks that can deliver market-beating gains. These three growth stocks have what they need to outperform over the long term, but are down between 51% and 80% from their peak prices last year.
Actions of Shopify (STORE -6.26%) benefited greatly from the increased demand for online shopping when the pandemic kept us all at home. The former top flight is down more than 80% from the peak it reached last year.
Shares of Shopify have tanked in large part because investors are nervous about the company’s ongoing transition from a primarily software company to one that also excels at fulfillment services like its e-commerce rival, Amazon. To this end, Shopify acquired Deliverr for $2.1 billion in July.
Deliverr is a provider of fulfillment technology that enables two-day shipping for direct-to-consumer merchants. This will make it easier for more Shopify business partners to offer blazing-fast fulfillment services without relinquishing control of their customer relationships to Amazon.
Heavy investments to shore up its fulfillment network, combined with a general slowdown in online shopping, led to bottom-line losses for Shopify’s e-commerce businesses in the first half of 2022. Investors will be happy to hear that the company ended June with nearly $7 billion. cash. That’s more than enough to keep operations running while overall e-commerce activity catches up with the company’s enhanced capacity.
Duolingo (DUO -2.58%) Stocks surged during the tighter pandemic lockdowns but have more than halved since peaking last September. This language-focused education company owns the highest-grossing education app in AppleGoogle App Store and Google Play Store.
Learning a new language or brushing up on an old one was one of the top activities for people with extra time during the strict restrictions related to COVID-19. Investors worried that fewer people with extra time on their hands would slow Duolingo’s rapid rate of growth and hit the stock without waiting for evidence.
You wouldn’t know it by looking at the stock price, but the Duolingo app still attracts new subscribers and retains old ones. In August, the company reported second quarter revenue that grew more than 50% from the prior year period.
Duolingo’s relentless focus on improving its lessons in ways that encourage free users to become paid subscribers is working. An impressive 25% of daily active users at the end of June were paid subscribers, up from 21% a year earlier. These impressive earnings at a time that should be an additional challenge for online education companies to make year-over-year comparisons suggest a bright future ahead.
Actions of SoFi Technologies (SOFI -5.62%) have fallen about 77% from a peak 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 using 6.6 million of 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 Galileo’s API, which enabled 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 making large investments to consolidate its unique position, the company has reported positive earnings before interest, taxes, depreciation or amortization (EBITDA) for two consecutive years. The share price can be volatile, but this well-managed bank is set to generate above-market profits over the long term.
John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Cory Renauer He has seats on Duolingo, Inc., Shopify, and SoFi Technologies, Inc. The Motley Fool has seats on and recommends Amazon, Apple, and Shopify. The Motley Fool recommends the following options: January 2023 long calls at $1,140 on Shopify, March 2023 long calls at $120 on Apple, January 2023 short calls at $1,160 on Shopify, and March 2023 short calls at $130 on Manzana. The Motley Fool has a disclosure policy.