Please ensure Javascript is enabled for purposes of website accessibility

3 Top Stocks to Buy That Fell More Than 20% Last Week

By Rick Munarriz - Mar 8, 2021 at 8:35AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Three hot growth stocks plunged 21%, 22%, and 26% last week. Let's go shopping.

For a lot of investors, last week was a ho-hum Wall Street affair. The S&P 500 rose a decent 0.8%, a strong showing on an annualized basis. However, some of the market's hottest stocks took big steps back last week, creating a potential dinner bell for opportunistic buyers.

Lemonade (LMND 9.96%), Bandwidth (BAND 8.69%), and Opendoor Technologies (OPEN 14.88%) were some of last week's biggest losers, plummeting 26%, 21%, and 22%, respectively. They are strong candidates to bounce back. Let's take a closer look. 

Cash falling from the sky on a delighted recipient.

Image source: Getty Images.


One of last year's hottest IPOs has been turning lemonade into lemons lately. Lemonade shed more than a quarter of its value last week, and it has now surrendered more than half of its value since peaking two months ago. Lemonade remains a name worth watching. It is disrupting the insurance market with a next-gen platform that uses artificial-intelligence chatbots to offer quotes and kick off the claims process when needed. 

Lemonade's flagship product is property insurance for renters, but as its youngish client base turns to home ownership it opens the door for healthier premiums. There are now a million active Lemonade policies, a 56% increase over the past year. Premiums paid annually per customer have climbed by an average of 20%. Scalability and date keep making Lemonade smarter, helping its gross loss ratio improve with every passing report. 

Lemonade has still more than tripled since its IPO at $29 last summer. It has a lot of real estate to tackle in terms of new geographic territories to conquer and new niches to explore. It now offers pet owner policies, for example. So, yes, it's not just the stock that has gone to the dogs lately -- but, you have to like Lemonade's chances at continuing to grow briskly as it upends an industry ripe for disruption.

A person working on a laptop and smartphone at the same time taking notes.

Image source: Getty Images.


Fans of accelerating growth will warm up quickly to Bandwidth. The provider of tools to help enterprises embed voice, messaging, and 911 access into software and applications has been on a top-line growth tear since the end of 2019. It came through with dramatically expanding year-over-year revenue growth in every quarter last year. 

  • Q4 2019: 19%
  • Q1 2020: 29%
  • Q2 2020: 35%
  • Q3 2020: 40%
  • Q4 2020: 82%

Customers keep flocking to Bandwidth. It had 2,848 active CPaas -- that's Communications Platform-as-a-service -- accounts at the start of this year, 65% more than it had a year earlier. Returning customers are leaning more on the platform. Bandwidth's dollar-based net retention rate -- a popular metric for measuring SaaS stocks -- has risen from 113% to 133% over the past year. Put another way, active CPaaS customers are spending 33% more on Bandwith's solutions than they were a year earlier. Bandwidth is also now profitable on an adjusted basis. 

The accelerating growth party is about to end. It always does. The $108 million to $109 million in revenue that Bandwidth is projecting for the current quarter, translates to 58% to 59% top-line growth. However, that guidance -- as well as its outlook for all of 2021 -- is ahead of what analysts were expecting. 

A home with a FOR SALE sign that has now been sold.

Image source: Getty Images.

Opendoor Technologies 

There have been a couple of SPAC-deal implosions lately, and this high-profile Chamath Palihapitiya deal tumbled last week after a rough quarterly report. Opendoor is a pioneer in iBuying, revolutionizing the home-buying market with its online platform that acquires properties that are spruced up and made available for sale. Opendoor hit the market in mid-December after completing its merger with a SPAC, making last week's financial update its first quarter as a public company.  

Opendoor saw its revenue plunge 80% to $248.9 million. It sold just 849 homes during the fourth quarter, a far cry from the 5,013 digs it fulfilled a year earlier. This is scary stuff, but it also was widely expected. Opendoor suspended its iBuying business when the pandemic hit, and it's been largely working through its existing inventory. Its results were actually above its own earlier guidance. 

The good news here is that it has resumed its iBuying operations. It sees $600 million to $625 million in revenue for the current quarter -- 39% below where it was in the first quarter of last year and 54% off from where it was two years ago -- but it's a huge sequential jump. It also expects to double its footprint to cover 42 markets by the end of this year. With home prices buoyant, mortgage rates low, and suburbanization trend still rolling Opendoor's future is brighter than last week's report. 

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Bandwidth Inc. Stock Quote
Bandwidth Inc.
$23.14 (8.69%) $1.85
Lemonade, Inc. Stock Quote
Lemonade, Inc.
$22.97 (9.96%) $2.08
Opendoor Technologies Inc. Stock Quote
Opendoor Technologies Inc.
$7.49 (14.88%) $0.97

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/28/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.