A lot of recent IPOs have buckled below their original price tags, and last month, I took a look at some of this year's discarded rookies that should bounce back in 2020. Now it's time for me to go back a year and size up the 2018 IPO class to see which broken offerings have the potential to turn things around. 

Upwork (NASDAQ:UPWK) and Dropbox (NASDAQ:DBX) are two of last year's debutantes that I can see cracking their IPO price ceilings next year. It goes without saying that when you invest in IPO stocks, you should be willing to take on a fair amount of risk, but let's go over why these out-of-favor investments have what it takes to recover in 2020.

A man looking at a dual-monitor set up at his desk at the Dropbox office

Image source: Dropbox.

Upwork: Down 17.9%

It's been 13 months since Upwork hit the market at $15, and while the leading online marketplace for freelancers would go on to open at $23 and peak at $25 in the springtime of this year, the shares have fallen to the low teens after a poorly received third-quarter report last week. Upwork is still growing. Revenue rose 23% in its latest quarter, and its take rate -- the percentage of gross services volume that it keeps by matching up freelancers and contractors with companies looking for specialists -- is on the rise. Adjusted earnings also came in ahead of Wall Street expectations.

The rub for Upwork in last week's report was its guidance. It sees revenue growth slowing to between 17% and 18% in the current quarter. After back-to-back quarters of accelerating growth, we're seeing Upwork lift its foot off the pedal. The midpoint of its full-year guidance also moved slightly lower, and that's never a good look. The upside for Upwork is that it's in the right place at the right time as a primary matchmaker for the gig economy.

Dropbox: Down 10.2%

One of the cardinal rules of going public is that you shouldn't disappoint investors out of the gate. The provider of cloud-based storage solutions seemed to be living up to the hype when hit the market at $21 in the springtime of last year, more than doubling when it peaked three months later. It has, naturally, gone on to give up more than half of its peak value. 

Unlike many deficit-saddled IPOs, Dropbox is surprisingly profitable. Not only that, Dropbox has actually beaten analyst profit targets in each of its first six quarters as a public company. 

Quarter EPS Estimate EPS Actual Surprise
Q2 2018 $0.07 $0.11 57%
Q3 2018 $0.06 $0.11 83%
Q4 2018 $0.08 $0.10 25%
Q1 2019 $0.06 $0.10 67%
Q2 2019 $0.08 $0.10 25%
Q3 2019 $0.11 $0.13 18%

EPS = earnings per share. Data source: Yahoo! Finance. 

The rub for Dropbox has a combination of decelerating revenue growth and a rich valuation for a cloud-served niche that some view as a cutthroat market. The stock isn't cheap. Even if we look out to next year's estimates, we see a stock trading at 33 times earnings and more than 4 times its 2020 revenue.

The good news is that after eight straight quarters of decelerating top-line growth, we saw a marginal uptick in the third quarter. Its user base is expanding, and the same can be said for its average revenue per user. Profitable, growing companies don't stay out of favor for too long, and despite its lofty valuation, the shares have never been as cheap as they are right now.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.