Despite a strong bounce so far in February, the technology-centric Nasdaq 100 index is still down 11% for the year. But some individual stocks have suffered even steeper declines, plunging them into bear market territory.

In many instances, this presents an incredible buying opportunity that could generate significant long-term returns. However, not all tech stocks are created equal, and it's important to be selective amid broader stock market volatility. Here's one stock to buy at a discount and one you should consider selling.

A smiling gamer playing on their smartphone, with headphones on.

Image source: Getty Images.

The stock to buy: Unity Software

There have been incredible advancements in game development in recent years, particularly with emerging technologies like virtual reality, and Unity Software (U 0.95%) is at the center of it all. The company delivered an incredibly positive full-year 2021 earnings report on Feb. 3, sending its stock soaring by 17%. It's still down by 48% from its all-time high, which might be a big opportunity for investors.

Over 50% of all mobile, PC, and console games were created using Unity's various platforms in 2021, but the company also offers tools for filmmakers, and for industrial purposes. All in all, 3.9 billion people per month viewed content created with Unity throughout the year. 

For game developers, it's not just about the creation phase. Unity Pro, which is the company's flagship platform, also supports gaming operations once a product is in the market. It offers plugins for in-app purchases and advertising solutions, which allow developers to monetize, and analytics tools to help improve customer experiences. 

Unity reported strong revenue growth in 2021, and it continued to add clients who spend $100,000 or more annually, indicating that some of the largest creators in the industry are engaging the company's products. 

Metric

2019

2021

CAGR

Revenue

$541 million

$1.1 billion

42%

Six-figure customers

600

1,052

32%

Data source: Unity Software. CAGR = Compound Annual Growth Rate.

Unity's stellar performance is set to continue in 2022, with analysts estimating revenue to top $1.4 billion. And while the company isn't profitable yet, it's expected to be as soon as 2023. That makes the current tech sell-off a great time to add this stock to your portfolio, especially given the extent of its recent decline. 

An investor looking at stock charts on their computer monitors with confusion.

Image source: Getty Images.

The stock to sell: Robinhood

Robinhood Markets (HOOD 1.20%) is known as the stock trading platform to Generation Z. Prior to listing publicly in July 2021, the company received high praise for its ability to attract young, first-time investors. However, Robinhood has since faced a swathe of regulatory issues, and it made a pivot to offer cryptocurrency trading, which might be doing more harm than good to its business. 

The company reported its full-year 2021 earnings result on Jan. 27, and it provided further confirmation that the Robinhood platform, by several metrics, may have already peaked. In the fourth quarter, it had 17.3 million monthly active users, a decline of 18% from its all-time high in the second quarter, when it reported 21.3 million. Its revenue took an even larger hit over the same period, falling by 35% to $363 million. 

Part of the reason is the rapid rise and fall of its cryptocurrency broking segment. In mid-2021, cryptocurrencies made up over half of Robinhood's transaction-based revenue, driven primarily by its clients trading the meme-token Dogecoin. By the end of the year, crypto comprised just 18% of transaction-based revenue, likely because Dogecoin collapsed by 80% from its all-time high, wiping many investors out. 

But Robinhood faces much larger issues. The Securities and Exchange Commission (SEC) is scrutinizing a practice called payment for order flow (PFOF), which is the company's primary source of revenue. And that regulator is also reviewing the "gamified" features on smartphone trading apps like Robinhood, which could promote unnecessary risk-taking. 

Robinhood stock is down 82% from its all-time high price of $85, and the mountain of issues plaguing its business inspires little confidence that it'll ever return to glory. Steep share-price declines don't always equal good value, and in this case, investors might be better served looking elsewhere.