Growth stocks have generally had a tough go of things early in 2022. A combination of factors including pandemic-related challenges and macroeconomic shifts have led to major sell-offs for many tech stocks with forward-looking valuations. On the other hand…
recent turbulence has also created fresh opportunities, and risk-tolerant investors will be able to score some huge long-term wins by investing in the best of these beaten-down companies. With that in mind, read on to see why a panel of Motley Fool contributors identified Pinterest (NYSE:PINS), Fiverr International (NYSE:FVRR), and Lemonade (NYSE:LMND) as top stocks trading at big discounts
The economic reopening has not been kind to Pinterest
Parkev Tatevosian (Pinterest): The image-based social media company, Pinterest, took a beating in 2021. The stock has fallen 54.5% over the last year as the company was harmed by economic reopening on several fronts. First, people had more options on what to do with their time and chose to interact with Pinterest’s app less often as the year progressed. That caused Pinterest’s monthly active users (MAU) to fall in two consecutive quarters for a total loss of 24 million.
As you may already know, Pinterest is free to join and use. The company makes money by showing advertisements to users browsing its app or website. In that regard, economic reopening and ensuing supply chain disruptions reduced marketer appetite for promotion. There is little need to advertise your products if you can barely meet existing demand. The combination of factors is causing Pinterest management to forecast revenue growth in the high teens for the fourth quarter.
That’s a far cry lower than the near 50% rate of growth Pinterest has logged in each of its last three years. The deceleration in revenue growth and losses in MAU made investors nervous and sent the stock crashing. Pinterest is now trading at a price-to-sales ratio of 8.8, which is near what it was selling for in January 2020. At that time, Pinterest had 367 million MAU and an average revenue per user (ARPU) of $0.77. As of its most recent update on Sept. 30, Pinterest has 444 million MAU at an ARPU of $1.41. Investors can buy a significantly more robust business for the same price it was selling two years ago. That’s what makes Pinterest an excellent undervalued growth stock to buy in 2022.
Don’t miss out on this massive trend
Keith Noonan (Fiverr International): Companies around the world are increasingly turning to gig-based labor instead of the traditional employee-employer workforce dynamic, and Fiverr International is in a prime position to facilitate and benefit from this trend. Contracting labor through Fiverr offers businesses the opportunity to take a more flexible approach to staffing and cut down on office costs, employee benefits, payroll taxes, and other expenses. The platform also offers value for individual users. You can turn to its marketplace as a worker or hire someone for graphic design work, video editing, or other services.
The gig economy is poised for tremendous growth over the long term, but some near-term trends have put a serious hurt on Fiverr stock. The peak of pandemic-related social distancing seems to have…
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