Market downturns are inevitable, and as a long-term investor, you'll likely encounter at least several throughout your journey. But the market has proved its ability to rebound many times throughout its history, and the start of 2023 has already shown the promise of that.
Even so, investors can still buy incredible companies on sale right now. Here are two colossal stocks that are still trading at serious discounts over the trailing 12 months that you might want to add to your buy basket.
1. Shopify
Shopify (SHOP 1.26%) provides a broad suite of services for every business from small merchants to large brands -- whether online, offline, or both. And while e-commerce is a key part of the future of retail, omnichannel solutions remain vital for many brands. Shopify's software and hardware solutions are geared to both digital and brick-and-mortar businesses.
Case in point: In the third quarter of 2022, Shopify's offline gross merchandise volume grew 41% from the year-ago period on a constant currency basis, eclipsing the growth of its total gross merchandise volume for the quarter (11%).
Shopify's president, Harley Finkelstein, stated in the third-quarter earnings call that "the outsized pace of offline growth on Shopify continued as we brought on eight new merchants with over 20 locations each, and one with over 175 locations."
The company is also rapidly expanding its base of merchants who want to launch an online store and already have a large in-store retail presence. Finkelstein noted that since early 2021, roughly one-third of users adopting Shopify's point-of-sale (POS) pro software product are "established offline retailers who are entirely new to e-commerce or selling only on point of sale."
The company launched its mobile POS hardware device POS Go and expanded its Shopify Fulfillment Network with the purchase of Deliverr last July. And these are just two ways in which it's working to appeal to merchants' wide range of retail needs.
In the third quarter of 2022, Shopify had a 450% year-over-year surge in orders handled by its in-house fulfillment software. Total revenue grew 22% to $1.4 billion in the quarter, with merchant-solutions revenue and subscription-solutions revenue rising 26% and 12%, respectively, from the year-ago period. Subscription solutions facilitate recurring sales.
The company is still unprofitable, but its net losses are shrinking, and it had about $5 billion in cash and investments on hand at the end of the third quarter.
Shopify's long-term trajectory is promising. The stock's more than 40% surge since the beginning of 2023 may indicate that investor sentiment is finally reversing, even as the stock is still down by roughly the same amount from 12 months ago.
For investors seeking a long-term position in a leading e-commerce business with a compelling future, Shopify definitely is worth a look.
2. Fiverr
Fiverr (FVRR -1.17%) is another pandemic favorite that saw shares skyrocket over the past month, even as it's still trading down by double digits from its position one year ago.
The negative sentiment around growth-oriented businesses may finally be shifting, but it's important for investors to remain selective. That being said, if you're looking to invest in the potential of the gig economy, Fiverr remains a no-brainer choice.
In the third quarter of 2022, Fiverr reported that its take rate from transactions had improved to 30%, a hike of 160 basis points from the year-ago quarter. Total revenue grew 11% year over year to about $83 million, and average spend per buyer jumped 12% from the year-ago period. Adjusted earnings before interest, taxes, depreciation, and amortization were just shy of $7 million.
Fiverr's steady growth is a result of ongoing efforts to upgrade the experience for both buyers and sellers of freelance services on the platform.
For buyers (the people who hire freelancers), the company recently upgraded project management services for its Fiverr Business platform, which is designed specifically for larger companies looking for freelance talent.
Fiverr is also seeing increased adoption of its Promoted Gigs, which enable freelancers to buy ads for the services they offer, and Seller Plus, an invitation-only program to help freelancers with access to tools like advanced analytics.
Already, roughly 40% of American workers identify as members of the gig economy. Fiverr's strong top-line growth, rapid expansion of its take rate, and impressive array of services on its platform bode well for its ability to continue to capture more of a share of the gig economy even as the space remains competitive.
In a challenging economy, companies might be more likely to hire contractors rather than full-time talent. And more workers could be looking to earn extra money, increasing the availability of freelance talent. Fiverr shareholders can benefit from both tailwinds.
