HubSpot (HUBS 2.68%) has been on an epic run so far in 2023, fueled by a general recovery in technology stocks. Shares of the customer relationship management (CRM) specialist are up more than 60% so far this year (as of this writing), nearly six times the increase of the S&P 500. This marks a stark reversal of fortune compared to its performance in 2022, when the stock plunged 56%. 

Beyond the general market rebound, HubSpot's expansion into adjacent markets and its solid financial results have helped fuel the rising stock price. Furthermore, HubSpot was remarkably resilient throughout the downturn, adding customers and generating robust growth despite the macroeconomic headwinds it faced. This helped backstop investor confidence that the company is positioning itself for additional gains to come.

What does this mean for those who missed out on HubSpot's sprint higher? Should they buy the stock now in anticipation of additional gains or delay buying because of its frothy valuation and continuing uncertainty on the macroeconomic front? Let's see what the evidence tells us.

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Image source: Getty Images.

What's been weighing on HubSpot stock?

Despite the challenges of 2022, HubSpot was able to continue its remarkable growth streak, aided not only by its expanding product offerings but growing relationships with existing clients. That said, HubSpot was not immune to the issues that plagued the broader economy.

In the second quarter, HubSpot's revenue grew 25% year over year to $529 million. While that's solid growth for any company, it's still a shadow of the 47% growth it generated in 2021 -- before the current economic challenges began. 

However, there are signs that the worst may be behind us. On the earnings call, CEO Yamini Rangan noted, "Budgets remain under scrutiny ... and while buying trends have not improved, they have not gotten worse either." This suggests that the bottom is in. A recovery in the broader economy could drive even more impressive revenue growth for HubSpot.

What (else) could drive HubSpot stock higher?

The rebound in business spending aside, there are other catalysts that could drive additional gains for HubSpot stock.

One of the biggest opportunities is the company's move to serve larger businesses. HubSpot has long served small companies, or those with fewer than 20 employees. Over the past couple of years, HubSpot has been expanding up market to serve customers with between 20 and 200 employees. This mid-market represents a vast and largely untapped opportunity for HubSpot. 

Another of the company's growth strategies is expanding its product offerings. From its humble beginnings in inbound marketing, HubSpot has built out its suite of interconnected CRM tools (or Hubs), which now includes marketing, sales, service, content management, operations, and commerce.  

Each time the company expands its platform, its large and growing client base are historically the first customers to try and ultimately adopt its new offerings. This also increases HubSpot's total addressable market, which currently stands at $51 billion, but is expected to soar to $77 billion by 2028. At this point, HubSpot has less than 10% penetration across its product and customers segments, which leaves a long runway for growth ahead. 

How to approach HubSpot stock now

To be clear, HubSpot won't be every investor's cup of tea. The stock is currently selling for 88 times forward earnings and 9 times forward sales.  Given its valuation, there's likely no argument that will sway value investors.

However, since the company's IPO nine years ago, HubSpot has grown revenue by 1,850%, pushing its stock up 1,440%. Given its track record, the stock is worthy of a significant premium. Not only that, but HubSpot is expected to increase its revenue and earnings per share by strong double digits between now and 2024. 

Given the company's growing market opportunity and consistent track record of growth, HubSpot's recovery will likely accelerate as the economy rebounds -- which could come sooner than you might think.