In this article, we discuss the 10 famous tech stocks that are trading at a discount today. If you want to read about some more tech stocks that are trading at bargain prices, go directly to 5 Famous Tech Stocks Trading At Discount Today.
Technology stocks have been hammered in the past few months amid rising inflation. This is both good and bad news for growth investors. On the one hand, the value of their portfolios has plummeted drastically, the tech-loaded NASDAQ Composite Index is down close to 7% year-to-date, while on the other, the dip has brought about a glorious buying opportunity to pick up the shares of famous tech firms at bargain prices, a prospect that Cathie Wood of ARK Investment Management has described as “deep value territory”.
How to Separate Winners from Losers in Tech Selloff
However, since technology is undoubtedly the future, and there are almost as many tech firms as there are stars in the sky, it is very difficult to identify the winners of this crisis. Even large firms like Meta Platforms, Inc. (NASDAQ:FB), Uber Technologies, Inc. (NYSE:UBER), and Netflix, Inc. (NASDAQ:NFLX), among others discussed in detail below, have lost a huge chunk of their market caps, alongside smaller entities that have followed the broader trajectory around growth stocks on Wall Street as interest rates rise.
Some of the factors that separate the winners from the losers include stock market record in crisis situations, revenue growth, improving cash flow, profit outlooks, and competitive positioning. As smartphones, cloud computing, and digital payments become more central to the everyday lives of ordinary human beings, there is little doubt that the lull around growth stocks is just that — a lull. Many tech firms that are trading at discount prices today could preset investors with limitless rewards in the coming years.
The companies that operate in the technology sector and have registered a close to 20% or more decline in share over the past six months were selected for the list. The analyst ratings and business fundamentals of each company are also discussed to provide readers with some additional context for their investment decisions.
Data from around 900 elite hedge funds tracked by Insider Monkey in the fourth quarter of 2021 was used to identify the number of hedge funds that hold stakes in each firm.
Photo by Austin Distel on Unsplash
Famous Tech Stocks Trading At Discount Today
10. Shopify Inc. (NYSE:SHOP)
Number of Hedge Fund Holders: 86
Decline in Share Price Over Past Six Months: 46.97%
Shopify Inc. (NYSE:SHOP) provides a commerce platform and related services. The company beat market estimates on earnings per share and revenue for the fourth quarter of 2021. Although analysts expect to see revenue growth slow down in the next few years, it will still hover over 30%, well above peers in the marketplace. Shopify Inc. (NYSE:SHOP) also plans to increase incentives for small businesses as it competes with retail giants like Amazon and Walmart for market share.
On February 17, DA Davidson analyst Tom Forte kept a Neutral rating on Shopify Inc. (NYSE:SHOP) stock with a price target of $800, down from $1,400 earlier, underlining that the estimates for sales, marketing, and development expenses of the company were higher than expected as the management increased capital expenditures to advance its fulfillment efforts.
Among the hedge funds being tracked by Insider Monkey, Connecticut-based investment firm Lone Pine Capital is a leading shareholder in Shopify Inc. (NYSE:SHOP) with 1.3 million shares worth more than $1.9 billion.
Just like Meta Platforms, Inc. (NASDAQ:FB), Uber Technologies, Inc. (NYSE:UBER), and Netflix, Inc. (NASDAQ:NFLX), Shopify Inc. (NYSE:SHOP) is one of the tech stocks that elite investors have their eye on.
In its Q4 2021 investor letter, Baron Funds, an asset management firm, highlighted a few stocks and Shopify Inc. (NYSE:SHOP) was one of them. Here is what the fund said:
“During the quarter, as its stock fell to what we believed were compelling levels for longer-term investors, we initiated a position in Shopify Inc. (NYSE:SHOP), the leading cloud-based commerce software platform. Shopify’s value proposition is to provide a single, easy to use, operating system for merchants to manage every aspect of their business, including selling across multiple channels (direct to consumer as well as on third-party marketplaces like Amazon), managing product listings, inventory, orders, payments, shipments, marketing, and customer relationships. The company has over 1.5 million merchants, who have processed nearly $120 billion of sales during 2020 (and are expected to pass $170 billion in 2021), making Shopify Inc. (NYSE:SHOP) the second largest “behind-the-scenes” e-commerce player in the U.S. behind only Amazon, and ahead of Apple, Walmart, and eBay! Shopify has developed a scalable cloud platform that caters to merchants of all sizes, from a new entrepreneur just starting out to big brands like PepsiCo and Unilever. What we really like about Shopify Inc. (NYSE:SHOP) is the ecosystem the company has built, creating network effects and a virtuous cycle that will be very hard for competitors to overcome. The more merchants join, adopt, and transact on Shopify’s platform, the more partners are attracted to its ecosystem, adding more features and options to the platform (through Shopify’s App store), increasing the company’s moats and value to merchants.
The big picture here is that Shopify Inc. (NYSE:SHOP) is quietly building an Amazon competitor. But unlike Amazon, which also competes with its merchants (through first-party sales), Shopify is in the background, quietly helping merchants of all sizes to sell more online, aggregating the scale of the many merchants it has, to enable the benefits that only the largest merchants could get in the past. The opportunity for Shopify is two-fold. First, it is still early in the adoption curve, with the amount of gross merchandise value transacted on the platform expected to pass $170 billion in 2021 out of a $20 trillion-plus market opportunity (global commerce, ex-China), or less than 1% penetration. Second, as Shopify consistently continues to remove hurdles for merchants to sell online, the company can increase its share of the economics (or take-rate) from about 2.6% currently (Amazon charges between 10% and 20% on its fulfillment services). Lastly and perhaps most importantly, Shopify has a great culture, and it is led by a visionary founder, Tobi Lutke. One example of the company’s culture is a blog post from 5 years ago titled “Value Creation – Building for The Next 100 Years” (how many CEOs think, let alone talk about the next 100 years of their company?). The post starts with the following paragraph: “At Shopify, value creation is measured not just by growth of dollars and cents, but also by the growth of small business, computing literacy, and personal development. We are building for the long term.” In our view, Shopify Inc. (NYSE:SHOP) has all the ingredients necessary to become a core holding and we are excited about its long-term potential.”
9. Adobe Inc. (NASDAQ:ADBE)
Number of Hedge Fund Holders: 94
Decline in Share Price Over Past Six Months: 20.37%
Adobe Inc. (NASDAQ:ADBE) operates as a diversified software firm. A general lull around growth stocks has spooked investors and resulted in a massive slide in the share price of the firm over the past few months. However, the dip presents a buying opportunity as the firm recently posted market-beating earnings for the first fiscal quarter, growing cloud revenue, one of the biggest markets in the tech world, to more than $2 billion. The firm has also been steadily climbing the digital subscription revenue ladder.
On March 28, Argus analyst Joseph Bonner maintained a Buy rating on Adobe Inc. (NASDAQ:ADBE) stock with a price target of $575, highlighting that although the growth of the company was slowing, the “product lines and innovation engine remain solid”.
At the end of the fourth quarter of 2021, 94 hedge funds in the database of Insider Monkey held stakes worth $10.4 billion in Adobe Inc. (NASDAQ:ADBE), compared to 95 in the previous quarter worth $12.6 billion.
Here is what Richie Capital Group has to say about Adobe Inc. (NASDAQ:ADBE) in its Q2 2021 investor letter:
“Adobe Inc. (NASDAQ:ADBE) (up 24.8%) – In the last 15 years, Adobe Inc. (NASDAQ:ADBE) has transformed itself into a software behemoth, more than tripling its revenue since 2010. The company is famous for its namesake PDF-reader and photo-editing software Photoshop. However, Adobe Inc. (NASDAQ:ADBE) sells a full suite of software products through a recurring subscription model. Adobe Inc. (NASDAQ:ADBE) transitioned from selling boxed software to recurring subscriptions in 2013 and revenues have grown consistently since. Adobe Inc. (NASDAQ:ADBE) achieved $13B in revenue in 2020 with 88% Gross Margins.”
8. Block, Inc. (NYSE:SQ)
Number of Hedge Fund Holders: 96
Decline in Share Price Over Past Six Months: 39.96%
Block, Inc. (NYSE:SQ) is a payments technology firm. Even though the stock has registered a steep decline in share price recently, the analyst estimates for the larger payments industry remain as bullish as ever. According to Valuates Reports data, the online payment market will reach over $6 billion in size by 2027, growing at a compound annual growth rate of close to 15%. Block, Inc. (NYSE:SQ) is one of the leaders of the industry and expected to lead this growth.
On March 29, Susquehanna analyst James Friedman maintained a Positive rating on Block, Inc. (NYSE:SQ) stock with a price target of $240, noting that the integration of Afterpay with the Block platform would be a large revenue driver for the company in 2022.
At the end of the fourth quarter of 2021, 96 hedge funds in the database of Insider Monkey held stakes worth $5.9 billion in Block, Inc. (NYSE:SQ), compared to 98 in the preceding quarter worth $8.8 billion.
In its Q4 2021 investor letter, Baron Funds, an asset management firm, highlighted a few stocks and Block, Inc. (NYSE:SQ) was one of them. Here is what the fund said:
“High exposure to lagging E-commerce companies and underperformance of Block, Inc. (NYSE:SQ) (formerly Square, Inc.) in the Payments theme were the only material detractors from relative performance. E-commerce stocks lagged as a return to in-store shopping caused online shopping growth to moderate. Block, Inc. (NYSE:SQ) was the second largest detractor due to slowing growth in the Cash App segment and greater skepticism about the growth prospects for the pending acquisition of Afterpay.”
7. Alibaba Group Holding Limited (NYSE:BABA)
Number of Hedge Fund Holders: 115
Decline in Share Price Over Past Six Months: 20.04%
Alibaba Group Holding Limited (NYSE:BABA) provides technology infrastructure and marketing. The stock has suffered amid a broader Chinese crackdown against dual-listed firms. However, it remains one of the largest ecommerce firms in the world and veteran investors like Charlie Munger continue to view it in a positive light. Investors are also viewing the recent $25 billion share purchase program of the firm with interest. A Chinese government vow to stabilize markets has added further solidity to a bullish thesis for the firm.
Alibaba Group Holding Limited (NYSE:BABA) and other Chinese stocks are still trading in the red after the Public Company Accounting Oversight Board in the US said a deal with the Chinese government with regards to audits of dual-listed Chinese firms was still incomplete despite positive indications from Beijing in this regard. Both the Chinese and the US authorities have pledged to make the process easier, indicating that a deal is likely.
Among the hedge funds being tracked by Insider Monkey, Washington-based investment firm Fisher Asset Management is a leading shareholder in Alibaba Group Holding Limited (NYSE:BABA) with 14 million shares worth more than $2 billion.
In its Q4 2021 investor letter, Longleaf Partners Fund, an asset management firm, highlighted a few stocks and Alibaba Group Holding Limited (NYSE:BABA) was one of them. Here is what the fund said:
“Alibaba Group Holding Limited (NYSE:BABA) (-50%, -2.26%; -22%, -0.82%), the largest online retail platform in China, was another top detractor for the year and in the fourth quarter. Alibaba Group Holding Limited (NYSE:BABA) reported weak quarterly results and downgraded its sales outlook for the current fiscal year to 20- 23% growth, down from original guidance of 29-32% growth. Macro headwinds, weak consumer sentiment, regulatory scrutiny and competitive forces are having a larger than expected impact on overall retail sales and Alibaba’s market share. Notably, overall retail sales in China slowed down to a meager 5% growth in the September quarter. Slowing consumption, combined with stiff competition from new entrants in livestreaming ecommerce, have resulted in transitory deceleration in Alibaba’s core ecommerce growth trajectory. Additionally, the company is accelerating strategic investments in new initiatives, including Community Group Buying (Taocaicai), Taobao Deals, Local Consumer Services and International Ecommerce. These are future growth drivers but are depressing company’s earnings today. In December, we exited our full position in Alibaba Group Holding Limited (NYSE:BABA). This was more of a tactical move than a change in investment conviction. We initiated the position early in 2021, and the continued challenges in the second half of the year resulted in a loss that was material enough to be helpful from a tax distribution management point of view. We are sensitive to taxable gains and try to minimize where sensible, so we took advantage of the opportunity to reduce that liability and plan on revisiting the Alibaba Group Holding Limited (NYSE:BABA) opportunity in 2022. We continue to own Alibaba in our Asia Pacific strategy.”
6. Sea Limited (NYSE:SE)
Number of Hedge Fund Holders: 108
Decline in Share Price Over Past Six Months: 59.74%
Sea Limited (NYSE:SE) has interests in the digital entertainment, ecommerce, and digital financial service businesses. The company has huge stakes in the ecommerce business in places where US-based giant Amazon is still struggling to establish a foothold, like East Asia, Brazil, and Taiwan. A recent decision by the company to exit India, a highly competitive ecommerce market, also reflects the capital discipline of the management and frees up funds that can be diverted for growth in core markets.
On March 29, Morgan Stanley analyst Mark Goodridge also appreciated the decision of Sea Limited (NYSE:SE) to exit India as a “clear positive”, underling that the risk/reward in the Indian market was “no longer attractive” and the exit would also help the firm control ecommerce losses. The analyst has an Overweight rating on the shares with a price target of $220.
At the end of the fourth quarter of 2021, 108 hedge funds in the database of Insider Monkey held stakes worth $10 billion in Sea Limited (NYSE:SE), compared to 117 in the previous quarter worth $14 billion.
In addition to Meta Platforms, Inc. (NASDAQ:FB), Uber Technologies, Inc. (NYSE:UBER), and Netflix, Inc. (NASDAQ:NFLX), Sea Limited (NYSE:SE) is one of the tech stocks that institutional investors are picking up at bargain prices.
In its Q4 2021 investor letter, Tao Value, an asset management firm, highlighted a few stocks and Sea Limited (NYSE:SE) was one of them. Here is what the fund said:
“On the detracting side, our largest detractor is Sea Limited (NYSE:SE), which dragged 392 bps, is caught in a big rotation out of high growth stocks starting from November. Sea Limited (NYSE:SE) is among the core current holdings of “Mindful Compounder”, and appreciated 578% since initial purchases.”
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Disclosure. None. 10 Famous Tech Stocks Trading At Discount Today is originally published on Insider Monkey.