Nasdaq Bear Market: 3 Growth Stocks That Crashed Over 30% in August

The economic downturn and the bear market aren't over as inflation and supply chain issues remain big problems for many businesses. Investors are also scaling back the premiums they're willing to pay for stocks. As a result, many high-priced growth stocks have come down in valuation.

Three Nasdaq stocks that took a beating last month are Novavax (NVAX), Tandem Diabetes Care (TNDM -2.58%), and Bumble (BMBL 1.39%). These were among the worst-performing stocks in August -- but why? And should you consider buying the dip on any of them?

1. Novavax

COVID-19 vaccine maker Novavax has been on a downward spiral this year, crashing close to 80% since January. The company's vaccine obtained Emergency Use Authorization from the Food and Drug Administration in July, but it's a bit late to the game and it isn't authorized for use as a booster, either. 

Making things worse for investors, the company slashed its guidance in August. Previously, Novavax was projecting up to $5 billion in revenue for the year. Now, the company expects that it will generate no more than $2.3 billion. That's a sizable adjustment and miscalculation on the company's part, which came with no advance warning for investors. And the risk is that next year, revenue may not be much better as demand for vaccines and boosters could decline as concerns about COVID-19 subside.

Although the healthcare stock fell nearly 40% in August (the S&P 500 was down just 4%), and is now trading at a 52-week low, I still wouldn't buy it. The guidance miss is significant and it would be hard to have much confidence in management's projections. Novavax is a volatile stock and that isn't going to change until the business becomes more predictable and consistent. Unless you have a high risk tolerance, Novavax is a stock you'll want to avoid.

2. Tandem Diabetes Care

Insulin delivery company Tandem Diabetes tanked early on in August and was down 31% by the end of the month. The sell-off began after the company reported its latest earnings numbers. Like Novavax, Tandem Diabetes announced an adjustment to its guidance. Previously, it was projecting revenue to fall between $850 million and $865 million. Now, however, the company only expects revenue of up to $845 million for the full year. It's not as steep of a trim as Novavax's reduction was, but it was enough to spook investors.

The company also incurred a loss of $15 million for the period ended June 30 versus a profit of $4 million a year ago as Tandem's operating expenses rose by 31% and outpaced revenue growth of 16%. The company's insulin pumps generated just 2% revenue growth in the U.S. this past quarter and were down 7% in international markets.

Over the long run, however, that trend will likely change; the International Diabetes Federation estimates that by 2045, 783 million adults will have diabetes, up from 537 million in 2021. 

Tandem Diabetes stock is now trading near three-year lows. Although the business still isn't turning a consistent profit, this could be a solid pickup for investors willing to buy and hold. At just 3.8 times sales, it's trading at a much cheaper valuation than medical device company Insulet, which trades at a multiple of 15.

3. Bumble

Tech company Bumble offers its users an online dating service that is an alternative to Tinder by focusing on empowering women and allowing them to be the ones to initiate a conversation (as opposed to other services, like Tinder, where men or women can make the first move).

Since going public in 2021, it has been a rough ride for Bumble with shares falling 65%. Last month alone they fell 34% as the company also released earnings numbers that failed to impress investors. Revenue totaled $220.5 million for the period ended June 30, which was up 18% year over year. Its net loss of $6.4 million was also an improvement from the $11.1 million loss Bumble reported in the prior-year period.

For the full year, the company projects revenue of at least $920 million, which is 20% higher than the $765.7 million it reported in 2021. Those are decent growth numbers, but they simply may not be enough to compensate for the company's lack of profitability and its high valuation.

At 4.7 times revenue, Bumble trades close to Match Group's multiple of 5.1. But Match is larger (it also owns Tinder) and generates more consistent profits. So there's no compelling reason to pick Bumble over Match, which provides better value for investors.