In 2022, the market turned the growth stock narrative on its head. Many one-time favorite growth stocks, even in the consumer tech sector, had risen to nosebleed levels in 2021. But that rise gave way to the worst bear market since the 2008 financial crisis, taking most growth stocks down by more than 50% (and over 90% in a few cases).

Such drops could make contrarian investors think stocks have become buys. Whether that is true will depend on the stock, but a few consumer names are worthy of a review.

Roku

Roku (ROKU -3.05%) has experienced one of the more extreme drops in this bear market. After peaking at just under $491 per share in June 2021, it dropped to a low of just $44.50 per share by October. That amounts to a 91% decline in just 16 months.

Roku's price has recovered to about $55 per share as of the time of this writing. But even though many of its attributes remain, it faces potential troubles.

Investors will like that usage grew despite the end of the lockdowns. In the third quarter, Roku reported 22 billion hours of streaming, a 21% increase over the year-ago quarter.

However, the cash cow of Roku is ad spending. Due to the sluggish economy, companies have bought fewer ads. Also, input costs have risen, putting pressure on the company's profit from players. Since Roku has absorbed these higher costs to maintain usage growth, it has also weighed on profitability.

Such worries led to Roku forecasting lower platform and player revenue in Q4, and it does not know when the slump in ad spending will end.

Still, the price-to-sales (P/S) ratio has fallen dramatically, and at 3.5, it is near all-time lows. At that price, investors may want to consider adding positions before it starts soaring.

Wayfair

In 2021, investors hailed Wayfair (W -1.94%) as it found a way to compete against Amazon effectively. Since Amazon did not build much infrastructure to compete in the bulky goods market, Wayfair found a niche. Also, Wayfair ships products from other manufacturers, meaning it does not need to buy goods in hopes that they sell. This model gained strong traction during the lockdowns as revenue grew 55% in 2020.

However, those gains reversed once the fear of in-store shopping abated. Yearly revenue fell by 3% in 2021 and 13% in the first three quarters of 2022. In Q3 2022, the customer count also declined by 23% over the previous year. That led to a negative $1.1 billion in free cash flow for the first nine months, down from $114 million in positive free cash flow in the year-ago period.

These disappointing results had severe effects on the stock. After peaking at about $356 per share in March 2021, it fell as much as 92% from that high over a 19-month period.

Today, Wayfair's stock has risen off its lows, and bulls point to other glimmers of hope. About 78% of its customers were repeat buyers, up from 76% one year ago. Also, repeat buyers increased their spending by an average of 15% over that period.

Still, those improvements point more to survival than prosperity. So until Wayfair can at least turn cash-flow-positive, investors should probably avoid this stock.

Etsy

Like Wayfair, Etsy (ETSY -0.86%) has found a niche in the face of Amazon's domination. It specializes in artisan goods, craft supplies, and vintage goods, attracting loyal sellers and buyers.

Sellers benefit from a supportive environment and a search engine that links buyers to desired goods. Buyers have a place to find such goods and can search for their preferred sellers. The sophisticated search tools are a key part of the shopping experience on Etsy.

Still, like with other online sellers, the transition back to in-store shopping took its toll on Etsy. Revenue grew 9% in the first three quarters of 2022 compared with the same period one year ago. This is well below the 111% revenue increase in 2020 and 35% growth in 2021.

Also, over the same time frame, the number of active sellers dropped by 1% while the number of buyers dropped by 2%. Worse, since the number of sellers grew faster than the number of buyers in 2021, existing sellers continue to chase after a proportionally smaller pool of buyers.

Consequently, the internet and direct marketing retail stock dropped as much as 78% in less than one year, though it recovered modestly from the June lows.

Additionally, the P/S ratio of 7 is well above the 4 sales multiple in June but far below the 18 P/S ratio one year ago. While Etsy is likely a buy on a pullback, investors should avoid aggressive purchases until new buyers begin to grow at a faster pace.