Dozens of high-growth stocks have plummeted in 2021, among concerns about continued success following a pull-forward in 2020. Most of the stocks that have fallen are still very high-quality businesses, so there are plenty of deals for long-term investors to take advantage of.
Both fuboTV (FUBO 0.72%) and Palantir (PLTR -0.84%) have fallen into this category, both down 43% and 21% year to date, respectively. Despite this fall, each company has shown tremendous growth and major operational improvements. These moves have set each company up for the opportunity to see success over the next decade, which is why I think these two stocks are great deals today.
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1. fuboTV: A live-TV streamer
Unlike Netflix (NFLX -0.51%) or Disney (DIS -0.45%) which mainly offer movies and binge-worthy shows, fuboTV primarily focuses on live TV streaming. One of the few reasons that consumers are still holding on to cable is that many streaming services do not offer live news or sports, and fuboTV has recognized this.
fuboTV has largely been hammered in 2021, falling almost 70% off its all-time high despite consistent triple-digit revenue growth and a "beat and raise" earnings culture. The company is edging on one million subscribers while its total revenue grew 158% year over year in Q3, but that hasn't been enough to win over investors who are concerned about the company's net loss.
In Q3, fuboTV lost $106 million, roughly 68% of its Q3 revenue. The driver of this has been subscriber-related expenses which cost the company $143 million in Q3. However, this net loss is improving significantly. In Q3 2020, the company's net loss was twice as high despite revenue being half as much. Even with these advancements, largely driven by major adoption, investors have yet to jump fully on board.
In addition to being a unique live-TV streaming service, fuboTV has another trick up its sleeve. The company recently released a gambling segment of its business: fubo Sportsbook. It is available in Arizona and Pennsylvania, allowing fuboTV users to bet on sports in real-time while watching the game on the same platform.
The launch of fubo Sportsbook will undoubtedly increase engagement from those users as it expands into more states, which creates a higher value proposition for advertisers. With more valuable ad space, advertising revenue has the potential to rocket higher, growing faster than the already rapid 147% year-over-year advertising revenue growth it saw in Q3.
With these two unique markets combined, fuboTV has created an unrivaled experience for both sports betters and live news watchers. No other company does exactly what fuboTV is doing, and the successful integration of fubo Sportsbook with the platform could mean good things for the company. fuboTV trades for less than four times sales, making it a steal for long-term investors right now.
2. Palantir: Not just a government contractor
When government organizations and commercial enterprises need to analyze large, uncoordinated, and unstructured data sets, Palantir is a top choice. The data analytics company can analyze trends and similarities hidden deep within data sets, allowing its customers to find insights that they may never have noticed before. Using this particular set of skills, the company has become extremely valuable to companies and organizations. The company has just 203 customers, but the average revenue for the top 20 customers is $41 million.
Palantir is currently unprofitable, but investors are rather negatively focused on the company's customer makeup. Palantir started as a data analytics company specifically for the government, but in 2016 it launched Foundry -- a data analytics platform for the commercial sector. Since then, it has gained traction in the commercial space, but in Q3, government revenue still made up 56% of its total revenue.
Many investors want Palantir to be a company that serves the commercial sector more, and it is doing just that. In Q3, the commercial customer count grew 46% sequentially, and commercial revenue grew 103% year over year. This rapid commercial adoption seemingly hasn't been fast enough for investors, but the fact remains that Palantir is rapidly growing into more than just a government contractor.
Palantir's two major risks have been improving in 2021. With commercial revenue rapidly growing and the company's net loss -- which represents 33% of revenue so far this year -- decreasing from $1 billion in the first nine months of 2020 to just $364 million in the same period in 2021, the future is looking bright for Palantir. As shares are down 21% year to date, I think today could be a great time to create a position in this fast-growing company despite shares trading at 24 times sales.
