Growth stocks started 2023 on a positive note, along with much of the stock market. But equities, growth-oriented or otherwise, have yet to recoup the losses they accumulated last year. So plenty of excellent companies remain whose shares are down massively over the trailing 12-month period, providing exciting opportunities for investors to pick up shares from the discount box.
Two such companies that investors shouldn't miss out on are Match Group (MTCH 1.73%) and Adyen (ADYE.Y 0.33%). Both of these companies are solid buys.
1. Match Group
The market is swiping left on Match Group right now. The online dating specialist had a challenging year in 2022, during which its financial results disappointed compared to the previous year, a key reason why its shares have declined by 60% over the trailing 12-month period. Match Group's fourth-quarter results illustrate that.
The company's revenue declined by 2% year over year to $786 million. Match Group's total paying members and revenue per payer declined slightly as well.
Even so, Match Group remains an exciting stock to buy. One of the key reasons why is the company's massive ecosystem. Tinder remains one of the most popular dating apps in the world, Hinge is also widely successful, and Match Group boasts many other websites and apps under its banner. Overall, the company has about 16.1 million paying users who visit one of its platforms regularly.
That gives the company plenty of opportunities to monetize its user base in online dating. That's why Match Group recently brought in Will Wu, a former executive of Snap experienced in digital social product innovation, to jump-start Tinder and Match's other platforms by introducing new attractive features that cater to the company's customers.
Match Group has already been testing various features on Tinder and Hinge, including new ways of filtering who one sees and can connect with based on dating intentions. The company has a list of potential new tweaks it will test this year. Match Group still sees massive worldwide opportunities ahead, especially in Asia with its high population and low online dating penetration.
And given that the value of Match Group's platform increases as more people use it, we can expect paying (and non-paying) members to continue to grow long-term despite the fourth quarter's decline. Patience will be key here, but Match Group is still in a solid position to deliver market-beating returns.
2. Adyen
Netherlands-based Adyen is a fintech specialist that offers its clients an integrated payment platform, allowing them to accept various payment methods seamlessly across multiple countries and continents. The company's list of customers is a clue to how valuable its services are and how successful it is. It includes multiple famous multinational corporations such as Spotify, eBay, and Etsy.
A look at Adyen's financial results confirms its success story. In the second half of 2022, the company's revenue increased by 30% year over year to 721.7 million euros ($765.2 million), while its total payment volume jumped to 421.7 billion euros ($447.1 billion), 41% higher than the year-ago period.
It is true that Adyen's growth rates have slowed recently compared to the early days of the pandemic, a slowdown that contributed to its share price declining by 29% in the past year. Many fintech and e-commerce companies have suffered a similar fate due to coronavirus-related dynamics since these services were in much higher demand in the early days of the outbreak.
More importantly, Adyen has consistently reported solid revenue and earnings over the years. The company's prospects depend on its ability to continue doing so, and we have excellent reasons to believe it can.
There remains plenty of whitespace for Adyen, especially in regions beyond Europe, where it generates much of its revenue. The company's North American operations have been growing faster on that front. In the second half of 2022, North America revenue grew 45% year over year to 190.7 million euros ($202.2 million), compared to Europe's 20% year-over-year growth to 399.4 million euros ($423.5 million).
As Adyen continues to make headway in markets in which it has less of a presence, both its payment volume and revenue will continue rising. Adyen expects top-line growth in the mid to late 20s in the medium term. Even beyond that, Adyen's solid position in fintech and the general growth of the entire industry will propel the company to new heights.
Adyen's platform benefits from high switching costs, since its customers can't easily switch payment providers without risking business interruptions. This competitive edge only adds to Adyen's appeal to investors ready to hold on to its shares for a decade or more.
