What happened

Shares of HubSpot (HUBS 0.02%) rose 66.3% during 2021, according to data from S&P Global Market Intelligence.

Despite its CEO suffering a bad injury early in the year, HubSpot didn't skip a beat, posting consistent revenue and earnings beats throughout the year while also introducing new products and services. The accumulation of all of these accomplishments resulted in a 66% gain, despite the plunge in high-growth stocks toward the end of the year.

A person working at a desk with a computer screen.

Image source: Getty Images.

So what

HubSpot beat revenue and earnings projections in every quarter last year, so it's no wonder the stock did well. But it wasn't just that it beat revenue expectations; the company managed to accelerate its growth at higher rates this year than it did last year. For instance, HubSpot posted 48.5% revenue growth last quarter, much faster growth than the 31.7% growth posted in the year-ago quarter.

In some ways, it's not surprising that HubSpot is doing so well in the aftermath of the pandemic. The company's initial core product is an "inbound" marketing hub, which allows businesses to create content online that pulls customers toward a company's website and other points of contact. Over time, HubSpot has expanded its offerings into customer relationship management (CRM) software, customer service software, and content management systems (CMS). With every business needing to become a digital-first business over the past two years, HubSpot benefited. Now that the economy is bouncing back strongly, revenue is accelerating.

HubSpot continues to expand this ecosystem. In April, the company introduced Operations Hub, which allows HubSpot customers to see all their data from multiple sources in a single unified system while automating mundane and duplicative tasks. At its October INBOUND conference, HubSpot introduced HubSpot Payments, a payment processing service built on the Stripe infrastructure and integrated under its comprehensive ecosystem.

All of this success came despite CEO Brian Halligan suffering multiple injuries in a snowmobiling accident in March. In August, Halligan decided to step back permanently as CEO and into the Executive Chairman role while ceding the CEO job to Chief Operating Officer Yamini Rangan. Still, it appears the company didn't skip a beat, despite Halligan's reduced presence.

HUBS Percent Off All-Time High Chart

HUBS Percent Off All-Time High data by YCharts

Now what

After the harsh sell-off in growth stocks, HubSpot is now 39% below its all-time high of $866 set back in November. So, is it time to buy?

I admit, I've long admired HubSpot but missed the boat on its terrific run, as I've always thought the stock was somewhat expensive. But after this sell-off, the stock now trades around 20 times sales, which isn't too bad for a software company growing revenue by nearly 50%.

In mid-December, Goldman Sachs analysts initiated coverage on HubSpot with a "Buy" rating and a $953 price target, citing proven execution and the fact that Amazon was reportedly interested at one point in buying HubSpot for $38 billion -- 58% higher than its market cap today.

It's difficult to know if this is the bottom for HubSpot and other high-growth, high-multiple tech stocks since so much of the price action appears to be dictated by inflation numbers and the actions of the Federal Reserve. If inflation is more severe and lasts longer than expected, HubSpot could continue to fall. But if inflation begins to come down and the Fed sticks to its plan, the stock could find its footing here and potentially resume its rise. 

If you are looking at top-tier software stocks amid the recent bloodbath, HubSpot should be on your watchlist, as it has earned its way into that top tier following its blockbuster 2021. It's certainly a stock I'll be monitoring in 2022.