In the current bear market, growth stocks across a range of sectors are trading down, some of them significantly so. For some of these companies, the stock price drops are justified as market hype had taken hold and elevated their prices too much and too fast. They are very unlikely to return to those prior heights. But some growth stocks got unfairly caught up in the broader selloff. Investors should expect these high-quality, growth-oriented businesses to recover from this down period in time.
For long-term investors with a minimum investment horizon of three to five years and available cash not needed for more immediate expenses or to bolster an emergency fund, there are some quality growth stocks now trading at deep discounts that may be just too good to pass up. Let's take a closer look at three of them.
1. Teladoc Health
Teladoc Health (TDOC +2.35%) hasn't delivered the same growth recently that it did during the earlier phases of the pandemic, but that doesn't mean the telehealth giant's brightest days are behind it.
Think about it. Teladoc experienced a major surge when people were doing their best to stay at home and had reason to avoid visiting medical professionals in person if they could. It would be unreasonable to expect its pace of expansion to maintain that unusual rate in a society that is now moving away from those pandemic-related behaviors.
NYSE: TDOC
Key Data Points
But Teladoc is continuing to grow at a solid clip from its pre-pandemic levels while remaining a premier provider of virtual care services, and that industry is still growing at an impressive pace.
Teladoc reported revenue of $611 million in 2022's third quarter, up 17% year over year, while total visits on the platform totaled 4.6 million, a 14% increase from the prior-year period. The company's revenue and total platform visits were up by approximately 343% and 400%, respectively, compared to Q3 2019. And, while Teladoc is still operating at a GAAP net loss, that loss narrowed significantly in Q3 2022 compared to the first half of the year. The company also had about $900 million in cash and cash equivalents on its balance sheet at the end of the third quarter.
Teledoc continues to see strong growth across its wide range of virtual care services, especially its Primary360 primary care service, its chronic care business, and its BetterHelp virtual therapy segment. The BetterHelp segment alone is expected to generate a whopping $1 billion in revenue when full-year 2022 figures are released. As Teladoc continues to recover from the expensive writedowns it took in the first half of 2022 and builds out its diversified virtual care platform, which already counts roughly half of the Fortune 500 as clients, the company can move toward sustainable profitability, and its shares could easily surge back skyward.
2. Airbnb
Airbnb's (ABNB +1.03%) financial rebound in recent quarters left much of the travel industry in the dust. The platform's ability to cater to all types of travelers and travel needs -- whether someone is looking for a short-term stay in a premium vacation rental or a long-term living arrangement in an apartment -- has given it plenty of optionalities to grow even in a difficult macroeconomic environment.
There's no doubt that a recession or a continued pullback in consumer discretionary spending could impact Airbnb's platform to a certain extent. However, the long-term tailwinds driving the platform's growth are varied, and they extend way beyond any near-term recessionary headwinds. Roughly 20% of all stays on Airbnb are long-term bookings of 28 days or longer. On the third-quarter earnings call, CEO Brian Chesky stated that the company is taking strides to improve this segment of their business, noting: "I think more people are going to work remotely or in a hybrid way five years from now than they do today."
NASDAQ: ABNB
Key Data Points
In the third quarter, Airbnb reported revenue of $3 billion while net income totaled $1.2 billion. These metrics represented year-over-year increases of 36% and 61%, respectively, on a currency-neutral basis. Meanwhile, on a three-year basis, Airbnb's top and bottom lines surged by 70% and 260%, respectively. The fact is, consumers will continue to take trips and go on vacations, and the rise of remote and flex work will also grow with the expansion of the digital economy. These trends will drive more interest in and adoption of Airbnb's platform, and with an increasing number of people living in these rentals, there is tremendous untapped potential for the company and its shareholders.
3. Fiverr International
Fiverr International (FVRR +1.94%) is a well-known name in the world of freelancing. With a global network of freelancers and businesses leveraging the power of the gig economy on its platform, there is considerable untapped potential that the company and its shareholders can benefit from over the long term. Fiverr's business model is incredibly sticky, in part because it benefits from both sides of each freelance relationship.
NYSE: FVRR
Key Data Points
Its footprint extends to roughly 200 countries globally, and some of the largest companies in the world use Fiverr to connect with contract talent, while freelancers across an ever-growing selection of specialties provide services on the platform to earn a part-time or full-time income.
The company reported revenue of $83 million in the third quarter, an 11% increase from the same period in 2021 and a nearly 200% increase from the same quarter in 2019. Not only has Fiverr continued to aggressively expand its take rate (which stands at 30% as of the third quarter), but active buyers and spend per buyer continue to steadily tick upward, year after year and quarter after quarter.
Management estimates that the platform's total addressable market is about $240 billion in the U.S. alone. They have also pointed out that even with the rise of the gig economy and its continued projected growth, the contracting of most freelance work still happens offline. With a massive addressable market that remains vastly underpenetrated, Fiverr's growing footprint in this space means it is well-positioned for continued growth in the years ahead.
