Numerous short-term concerns have been scaring off investors lately. The world is in limbo about the conflict between Russia and Ukraine, and U.S. investors are worried about how impactful inflation will be over the coming year. These fears influence consumers' behavior, but when it comes to investing, long-term investors should see the dips that come along with these events as buying opportunities.
These concerns about the state of our world have pulled many high-flying tech stocks down, despite strong performance results being reported. Shares of Roku (ROKU 1.88%) and Fiverr (FVRR 4.32%) are both down more than 40% in 2022 alone, and both more than 76% off their all-time highs. There hasn't been just one reason for the drops of each of these companies, but if you have a time horizon of five or more years, these companies could be bargains now.
Roku has been the poster child for 2021 darlings that were hurt coming out of the pandemic, despite the company's consistent dominance in the streaming platform industry. On top of inflation and interest rate fears, the company has been damaged by supply chain headwinds that have prevented television manufacturers from shipping TVs: Q4 shipments fell below 2019 levels. Considering Roku thrives on increasing platform users and television sales, the company has been hurt.
Roku reported fourth-quarter earnings on Feb. 17, and shares subsequently fell 22%. Gross margin shrunk 3 percentage points year over year to 44%, driven down by hardware (primarily consisting of RokuTV and streaming players), which fell from 3% in the year-ago period to negative 28% in Q4. These declines were because of the aforementioned supply chain shortages, which management expects to continue into Q1. The company guided for just 25% year-over-year revenue growth for Q1, far below the company's typical 30% to 40% revenue growth.
However, investors who are measuring their investing time in years or decades might not want to sell just yet. In the face of intense competition from other streaming platforms from companies like Apple, Amazon, and Vizio, Roku is still showing that it is the top dog in the space. Hardware revenue declined 9% year over year in Q4, yet platform revenue jumped 49%. This shows that even with the company's temporary hardware headwinds, consumers are still adopting the software hand over fist. Additionally, the number of active accounts grew 17% year over year to a whopping 60 million.
Roku is a leader in this space, and with $242 million in net income and $188 million in free cash flow in 2021, the company is ready to invest in itself to keep it that way. While these headwinds might impact the first quarter, the storm clouds could clear in due time. Management is expecting growth to normalize and reach mid-30% rates by the year's end. The company's valuation is now just six times sales, much lower than its previous valuations in the double digits. Considering that Roku expects to ramp back up to normal levels after these headwinds pass, its shares are looking like a great buying opportunity today.
Fiverr knocked the doors off its earnings, reporting sustained growth even after the pandemic lockdowns. It got a major boost in 2020 and early 2021 because of the increased demand for freelance work during lockdowns. But many investors worried that as the world moves out of the pandemic, the demand for freelancers would fall back to pre-pandemic levels. Fiverr proved them wrong this quarter. The company saw Q4 revenue grow 43% year over year to $80 million, driven by both increasing spending per buyer and the number of buyers on the platform. Fiverr now has 4.2 million buyers spending an average of $242, which grew 18% year over year.
These results show that freelance work is still in high demand, and as one of the leading platforms for freelancers (sellers providing a service) to connect with buyers (consumers paying for freelance work), Fiverr is still reaping the benefits. The company has been investing heavily in making its platform the best experience for both freelancers and companies by implementing various features, including freelancer events and webinars, and Fiverr Inspire for buyers. Inspire is a catalog that buyers can look at to see real work done by freelancers, helping them pick out the worker that best fits their needs.
The long-term opportunity for freelance work will remain prevalent, and this quarter from Fiverr showed that. Fiverr was even able to increase its take rate (the money it receives for facilitating each transaction) to 29.2%, which shows that companies are willing to keep paying up to use its platform. The assumption that gig work would disappear has crushed Fiverr over the past year, bringing its stock price down 78% from its all-time high. It now trades at just 8.6 times sales, which is cheap for a market leader growing over 40% year over year. At these prices, Fiverr might be a stock that can crush the market over the next five years.