When growth equities are popular, there's no better time to be in the stock market. When they're hot, options can produce extraordinary gains and outperform the market dramatically. On the other side, growth stocks are also vulnerable to massive declines during market crises, as we have seen thus far in 2022. That is why it's critical to understand the dangers of growth investing, because the majority of these firms have stratospheric valuations that are very vulnerable to interest rate hikes.
It's difficult to predict how long the current market downturn will continue, but that shouldn't stop investors from taking a closer look at long-term buying possibilities. If interest rate hikes make growth equities less appealing for a period of time, if you have a long investment horizon and wish to invest in cutting-edge firms, now may be an excellent moment to begin including them into your portfolio. We'll look at a few firms with inventive business models and strong earnings growth that could develop into excellent value plays at current prices.
Here are 3 beaten-up growth stocks you should consider for long-term investment:
Shopify (NASDAQ: SHOP)
This beaten-up stock is one of the most compelling ways to profit from e-commerce's growth, which is a trend that isn't going away any time soon. The consumer economy is largely driven by small and medium-sized enterprises, for which Shopify's cloud-based commerce platform is an essential component.
As a result, the firm's growth has been nothing short of incredible in recent years. The most recent quarter from Shopify was a reminder of why it's been such a success, as the business generated total revenue of $1.12 billion, up 46 percent year over year, and gross merchandise volume of $41.8 billion, up 35 percent year over year.
It's also worth noting that, according to the company, it set a new Black Friday-to-Monday weekend record last November, with sales of $6.3 billion worldwide, up 23% year over year. According to analyst projections, Shopify stock is expected to have an average price target of $1584.29 in the future, implying a 77.53 percent rise from current levels. While it's difficult to conceive of shares climbing back to that level, Shopify's recent selloff may be a lucrative way to invest in this cutting-edge e-commerce firm.
Coinbase (NASDAQ: COIN)
If you believe that cryptocurrencies are here to stay, buying a stake in the world's most popular cryptocurrency exchange makes sense. Given how volatile these financial instruments can be, having access to them through Coinbase stock is appealing.
The stock has taken a significant hit thus far in 2022, dropping over 26% year-to-date. Coinbase stock, on the other hand, is worth checking out if you've been looking to get in on one of the most hyped-up IPOs of recent memory for a bargain. Investors should be aware that Coinbase has a very manageable forward P/E of 14.9, which is far lower than the average for growth stocks.
There's a lot of potential in how Coinbase may diversify its income by catering more to institutional investors and developing NFT-related goods and services. It's critical to note that this firm's financial results are inextricably linked to the cryptocurrency market. Since Coinbase generates the bulk of its income through transaction charges, it may be preparing for a difficult quarter. With that in mind, shares are trading near 52-week lows and may be poised to rise if bitcoin and other significant cryptocurrencies can establish a bottom in the next several weeks. Whatever the case, it's difficult to dispute that buying shares at current levels is a good idea if you're optimistic about cryptos' long-term prospects.
Airbnb (NASDAQ: ABNB)
Finally, as a beaten-up growth stock, Airbnb stock is another candidate to consider adding at this time, especially since pent-up travel demand should boost bookings later in the year. It's a firm that revolutionized the travel industry by creating a platform that allows hosts and guests to book spaces and experiences online.
It seems investors might have quickly forgotten about Airbnb's record-breaking third quarter, as the business reported its greatest revenue and net income ever and saw its Adjusted EBTIDA exceed $1 billion for the first time.
These figures suggest that the firm is progressing in the correct direction. COVID's new variants may have an impact on Airbnb's upcoming quarter, but investors should still be interested in its long-term prospects. Shares are down about 13% so far this year, and they may get back on track later this year, making now a good time to add exposure to this innovative travel business.