The strong rally in growth stocks earlier this year has started to fizzle out, but some names didn't fully participate. A lot of promising names are still trading more than 50% off their 52-week highs -- and in some cases well below their previous high-water marks.
Roku (ROKU 0.43%), Datadog (DDOG +2.25%), Teladoc Health (TDOC +4.33%), Peloton Interactive (PTON +1.30%), and Match Group (MTCH +2.10%) are five stocks among the names trading lower this year. Let's see why they aren't partying like it's 2023 right now.
NASDAQ: ROKU
Key Data Points
Roku
Let's start with Roku. The leading platform for streaming video through TVs is trading 55% below its 52-week high, but it gets worse. Roku stock is down a blistering 87% since peaking two summers ago.
Roku has gone from being profitable to posting wide losses. The steady sequential run of growth in average revenue per user ended in its latest quarter as advertisers are paring back their marketing missives in this dicey economic climate. Roku still deserves better than its stock chart.
Image source: Getty Images.
Roku is entertaining a record 70 million active accounts, and those viewers are spending an average of 3.8 hours a day on the platform. People aren't going to stop streaming anytime soon, and Roku has double the U.S. market share of its nearest rival. The slide in ad revenue is a drag, but sponsors will be back when consumers are ready to spend again. The red ink isn't a good look, but Roku's guidance calls for a return to positive adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) for next year.
The future is bright for a leader in a niche that keeps growing, and now it has its sights set on international opportunities. Whether it recovers on its own or a hungry giant gets on bended knee, Roku is a value at current levels.
NASDAQ: DDOG
Key Data Points
Datadog
When growth stocks initially started to contract in early 2021, Datadog rose above the malaise. The cloud-based platform for delivering an enterprise with early downtime reports and other analytic essentials was growing too quickly to ignore. Datadog would go on to peak in November 2021, and it's currently trading 53% below its 52-week high.
Growth has slowed for Datadog. Revenue rose 44% for Datadog's latest quarter, a far cry from when top-line gains were soaring 84% a year earlier. It sees its business growth getting almost cut in half again this year. Datadog's forecast is for revenue to climb just 23% to 24% for all of 2023. Businesses are responding to weakening customer trends, but you can't skimp on monitoring your uptime and digging deeper into your analytics. Datadog's bark may soon be better than its bite.
NYSE: TDOC
Key Data Points
Teladoc Health
You have to go down a long way to take Teladoc's pulse these days. The telehealth specialist that championed virtual consultations with medical pros through the early days of the pandemic has fallen out of favor now that office visits are the picture of health. The stock is trading 67% below its 52-week high.
Here's another rough snapshot of how fast Teladoc has fallen out of favor. When it closed on its purchase of Livongo Health three years ago, the acquisition was worth $18.5 billion in a cash and stock deal. Today all of Teladoc is worth just a quarter of the Livongo purchase.
Revenue has slowed sharply since the initial pandemic spike. Its top-line growth slowed to 18% last year, including a 15% slip in its latest quarter. It's targeting a 6% to 11% increase in 2023. Competition has intensified, but Teladoc remains a big brand in a specialty that makes sense as a way to curb skyrocketing healthcare costs.
Peloton Interactive
There's no denying that Peloton has been pedaling backward these days. Revenue plummeted 30% in its latest quarter, and the former connected fitness darling isn't even posting its subscriber engagement metrics anymore.
Peloton has become a punchline, but that was true even when its popularity was ascending. The at-home fitness game changer is struggling to sell its gear these days, but users are surprisingly sticking around. The 3.033 million in connected fitness subscribers it has heading into this year is 10% higher than it was a year earlier. With the stock 59% off its 52-week high and 92% below its all-time high, the upside is high if Peloton can start pedaling in the right direction.
Match Group
Stocks like Teladoc and Peloton became time capsule entries for the early stages of the COVID-19 crisis. Match Group should be thriving now that folks are out and about, scratching the itch to be social. Match Group is the company behind Tinder, the leading online dating app. It also has dozens of other popular love connection platforms. It's naturally the bellwether of dating app stocks.
The problem for Match Group investors is that -- like a Tinder profile using an overly flattering picture -- reality hasn't been as attractive as what was initially promised. Revenue declined 2% in its latest quarter, and even the 5% growth it would represent on a currency-neutral basis isn't impressive. Match Group sees 5% to 10% growth this year. It seems like a boring date, but with the stock trading at a reasonable 15 times next year's projected earnings it could be a long-term relationship worth exploring.
