Spring hasn't even sprung, and it's already been a lousy year to be a growth stock investor. The S&P 500 Growth Index has given up a jaw-dropping 18.1% in the year to date.
Investment bank analysts up and down Wall Street think the growth stock bashing we've seen all year has gone too far. In fact, they pinned some lofty price targets on these stocks that imply gains of 83% or better could be around the corner.
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Here's why they're so optimistic.
Coinbase
Coinbase (COIN 2.72%) shares have fallen 36% so far this year, but Wall Street analysts who follow the cryptocurrency exchange think it can recover in a dramatic fashion. The average price target on Coinbase right now suggests 95% upside just around the corner.
NASDAQ: COIN
Key Data Points
Discount stock brokers have already chased each other to the bottom, but crypto traders are still willing to pay relatively large fees. In 2021, Coinbase delivered a stunning $3.6 billion profit that worked out to 49% of topline revenue.
Declining prices of Bitcoin and dozens of other cryptocurrencies could correspond with less trading activity this year. Luckily, collecting fees from cryptocurrency traders isn't nearly as important to Coinbase as collecting fees from cryptocurrency users.
If you want to get your hands on a non-fungible token (NFT) or manage one that came with your new handbag, you're going to need a wallet from Coinbase or one of its competitors. In 2022, Coinbase expects to spend more than $4 billion on technology and development. That doesn't guarantee its crypto wallet will become ubiquitous, but it sure has a good chance.
Shopify
Shares of Shopify (SHOP 2.63%) have already crumbled by more than half in 2022, but Wall Street expects a rebound. The average target for this e-commerce giant represents an 83% gain over recent prices.
NASDAQ: SHOP
Key Data Points
Shopify stock has been under a lot of pressure recently because the company delivered softer-than-expected guidance when management reported fourth-quarter earnings in February. The company expects e-commerce in the first half of 2022 to be muted compared to last year's pandemic-driven growth.
In addition to decelerating top-line revenue, Shopify expects to invest aggressively back into its business throughout 2022. This will squeeze the company's profit margins, but it will also cement its position as the best possible partner for independent merchants.
Shopify had a hand in more than 10% of America's e-commerce sales in 2021. That makes it second only to Amazon at the moment. Maintaining this dominance could get expensive, but it will all be worth it in the long run.
Upstart
Upstart's (UPST 6.41%) stock price rose in response to a sparkling fourth-quarter earnings report in February. That wasn't much consolation to investors who have seen it fall 71% from a peak it reached last October.
NASDAQ: UPST
Key Data Points
Investment bank analysts who get paid to follow Upstart think the stock can bounce back and climb even further. The consensus price target on the fintech stock right now represents a 90% premium over its recent price.
Upstart employs artificial intelligence to sift through more data points than traditional FICO scores. Hiring Upstart to help originate loans allows banks to reach customers they may have overlooked due to FICO scores that don't paint a complete picture of their financial profile.
Banks are beating a path to Upstart's door right now. Total fourth-quarter revenue shot up 252% year over year, and 2022 could be another big year. Upstart mostly deals with personal loans, but it recently expanded operations to include the relatively enormous market for auto loans.
As more customers give Upstart more data to work with, the company's lead on any potential competitors gets longer. There could be more temporary dips, but Upstart's best days are ahead of us.
