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 2.14%), Bandwidth (BAND 7.82%), and Opendoor Technologies (OPEN +0.23%) 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.
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Lemonade
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.
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Bandwidth
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.
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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.
