The technology sector of the stock market has spent much of 2022 in bear territory, with many stocks down 20% or more since the beginning of the year. The Nasdaq-100 index, which is made up of 101 companies (most from the tech industry), provides a good indicator of how tech stocks are doing and it's down over 29.5% year to date.

Plenty of stocks in the index declined by significantly larger percentages, with several seeing their valuations slashed by half (or more). The challenge for investors is determining which tech growth stocks are attractive discounts poised to deliver long-term returns, and which are unlikely to recover to their previous highs. 

Share prices of Robinhood Markets (HOOD -5.42%) are down 85% from their all-time high, and the company's user base and revenue appear to be in structural decline. Peloton Interactive (PTON -4.57%) stock is down a whopping 95%, and its business is shrinking overall. Here's why neither stock represents a good value despite the steep losses. 

1. Robinhood's customers are less enthusiastic about investing

Robinhood made a name for itself as the stock-trading platform for Gen Z, a cohort of tech-savvy, curious young newcomers, most of whom were accessing the financial markets for the very first time. They entered the scene with a bang during the height of the pandemic in 2020 and 2021, triggering a media frenzy as they sent stocks like GameStop and AMC Entertainment Holdings soaring, despite questionable business fundamentals.

The enthusiasm for investing was fueled by stimulus dollars flowing freely from the U.S. government, and low interest rates that underpinned a roaring bullish sentiment in the broader stock market. But the tide has gone out on both those factors in 2022. After some of the most popular technology stocks stopped rising, many of these new investors appear to have exited the markets altogether.

Robinhood's business suffered immensely as a result. In the recent second quarter of 2022, the number of monthly active users on its platform dipped by 34% year over year to 14 million, and the average revenue Robinhood earned from each user also collapsed by 50% to just $56 over the same period. A shrinking customer base, and making less money off those customers who remain, is not a recipe for a successful business.

Perhaps most concerning is that Robinhood's assets under custody dropped to $64 billion, the lowest level since the end of 2020. Since the company earns revenue based on transaction volume, having less of a base from which to earn fees is a precursor to much lower revenue. 

The effects are already showing. Robinhood generated $1.81 billion in revenue in 2021, and analysts predict that could drop by as much as 24.7% this year to just $1.37 billion. While they expect the company will return to growth in 2023, it's probably too early to place any confidence in a resurgence given the uncertainty in the broader economy. 

2. Peloton's issues are mounting in this economy

Peloton makes at-home exercise equipment and its products exploded in popularity during pandemic-related lockdowns. Its flagship product, the Peloton Bike, features a digital screen that can deliver professional classes into the user's living room. The company just released a new rowing machine as it seeks to give its loyal customers more options, but with a hefty price tag of $3,195, the question is whether it will generate much demand in this tough economy. 

That could be a misstep that Peloton simply can't afford. The company lost $2.8 billion during fiscal 2022 (ended June 30) as it invested heavily in growth to follow up its massive fiscal 2021 when it generated a record $4 billion in revenue. The problem is, fiscal 2022 was far weaker than Peloton anticipated, with sales shrinking nearly 11% to $3.5 billion, resulting in that big bottom-line hit.

Now the company is left with just $1.2 billion in cash and equivalents, so another year like fiscal 2022 could be catastrophic. Management has been making drastic changes, including cuts to its workforce, unlocking new sales channels through the likes of Amazon and Dick's Sporting Goods, and exploring subscription-based pricing models for its equipment. It's going to take time for these initiatives to bear fruit, so investors should be cautious about showing any optimism in the short term. 

As COVID-19 vaccines rolled out, gyms progressively reopened and social restrictions were dropped, which sent demand for Peloton's at-home equipment plummeting. But it also led to a steep drop in engagement, with existing customers currently completing about 43% fewer monthly workouts on average than at the pandemic-era peak. 

Unfortunately, Peloton is a shrinking business, and it's unlikely to recover all of its 95% decline in share price, especially as analysts predict a further drop in revenue during fiscal 2023.