In this article, we discuss the 10 famous tech stocks that are trading at a discount today.
Technology stocks have been hammered in the past few months amid rising inflation. This is both good and bad news for growth investors. On the one hand, the value of their portfolios has plummeted drastically, the tech-loaded NASDAQ Composite Index is down close to 7% year-to-date, while on the other, the dip has brought about a glorious buying opportunity to pick up the shares of famous tech firms at bargain prices, a prospect that Cathie Wood of ARK Investment Management has described as “deep value territory”.
How to Separate Winners from Losers in Tech Selloff
However, since technology is undoubtedly the future, and there are almost as many tech firms as there are stars in the sky, it is very difficult to identify the winners of this crisis. Even large firms like Meta Platforms, Inc. (NASDAQ:FB), Uber Technologies, Inc. (NYSE:UBER), and Netflix, Inc. (NASDAQ:NFLX), among others discussed in detail below, have lost a huge chunk of their market caps, alongside smaller entities that have followed the broader trajectory around growth stocks on Wall Street as interest rates rise.
Some of the factors that separate the winners from the losers include stock market record in crisis situations, revenue growth, improving cash flow, profit outlooks, and competitive positioning. As smartphones, cloud computing, and digital payments become more central to the everyday lives of ordinary human beings, there is little doubt that the lull around growth stocks is just that — a lull. Many tech firms that are trading at discount prices today could preset investors with limitless rewards in the coming years.
Our Methodology
The companies that operate in the technology sector and have registered a close to 20% or more decline in share over the past six months were selected for the list. The analyst ratings and business fundamentals of each company are also discussed to provide readers with some additional context for their investment decisions.
Data from around 900 elite hedge funds tracked by Insider Monkey in the fourth quarter of 2021 was used to identify the number of hedge funds that hold stakes in each firm.
Photo by Austin Distel on Unsplash
Famous Tech Stocks Trading At Discount Today
10. Shopify Inc. (NYSE:SHOP)
Number of Hedge Fund Holders: 86
Decline in Share Price Over Past Six Months: 46.97%
Shopify Inc. (NYSE:SHOP) provides a commerce platform and related services. The company beat market estimates on earnings per share and revenue for the fourth quarter of 2021. Although analysts expect to see revenue growth slow down in the next few years, it will still hover over 30%, well above peers in the marketplace. Shopify Inc. (NYSE:SHOP) also plans to increase incentives for small businesses as it competes with retail giants like Amazon and Walmart for market share.
On February 17, DA Davidson analyst Tom Forte kept a Neutral rating on Shopify Inc. (NYSE:SHOP) stock with a price target of $800, down from $1,400 earlier, underlining that the estimates for sales, marketing, and development expenses of the company were higher than expected as the management increased capital expenditures to advance its fulfillment efforts.
Among the hedge funds being tracked by Insider Monkey, Connecticut-based investment firm Lone Pine Capital is a leading shareholder in Shopify Inc. (NYSE:SHOP) with 1.3 million shares worth more than $1.9 billion.
Just like Meta Platforms, Inc. (NASDAQ:FB), Uber Technologies, Inc. (NYSE:UBER), and Netflix, Inc. (NASDAQ:NFLX), Shopify Inc. (NYSE:SHOP) is one of the tech stocks that elite investors have their eye on.
In its Q4 2021 investor letter, Baron Funds, an asset management firm, highlighted a few stocks and Shopify Inc. (NYSE:SHOP) was one of them. Here is what the fund said:
“During the quarter, as its stock fell to what we believed were compelling levels for longer-term investors, we initiated a position in Shopify Inc. (NYSE:SHOP), the leading cloud-based commerce software platform. Shopify’s value proposition is to provide a single, easy to use, operating system for merchants to manage every aspect of their business, including selling across multiple channels (direct to consumer as well as on third-party marketplaces like Amazon), managing product listings, inventory, orders, payments, shipments, marketing, and customer relationships. The company has over 1.5 million merchants, who have processed nearly $120 billion of sales during 2020 (and are expected to pass $170 billion in 2021), making Shopify Inc. (NYSE:SHOP) the second largest “behind-the-scenes” e-commerce player in the U.S. behind only Amazon, and ahead of Apple, Walmart, and eBay! Shopify has developed a scalable cloud platform that caters to merchants of all sizes, from a new entrepreneur just starting out to big brands like PepsiCo and Unilever. What we really like about Shopify Inc. (NYSE:SHOP) is the ecosystem the company has built, creating network effects and a virtuous cycle that will be very hard for competitors to overcome. The more merchants join, adopt, and transact on Shopify’s platform, the more partners are attracted to its ecosystem, adding more features and options to the platform (through Shopify’s App store), increasing the company’s moats and value to merchants.
The big picture here is that Shopify Inc. (NYSE:SHOP) is quietly building an Amazon competitor. But unlike Amazon, which also competes with its merchants (through first-party sales), Shopify is in the background, quietly helping merchants of all sizes to sell more online, aggregating the scale of the many merchants it has, to enable the benefits that only the largest merchants could get in the past. The opportunity for Shopify is two-fold. First, it is still early in the adoption curve, with the amount of gross merchandise value transacted on the platform expected to pass $170 billion in 2021 out of a $20 trillion-plus market opportunity (global commerce, ex-China), or less than 1% penetration. Second, as Shopify consistently continues to remove hurdles for merchants to sell online, the company can increase its share of the economics (or take-rate) from about 2.6% currently (Amazon charges between 10% and 20% on its fulfillment services). Lastly and perhaps most importantly, Shopify has a great culture, and it is led by a visionary founder, Tobi Lutke. One example of the company’s culture is a blog post from 5 years ago titled “Value Creation – Building for The Next 100 Years” (how many CEOs think, let alone talk about the next 100 years of their company?). The post starts with the following paragraph: “At Shopify, value creation is measured not just by growth of dollars and cents, but also by the growth of small business, computing literacy, and personal development. We are building for the long term.” In our view, Shopify Inc. (NYSE:SHOP) has all the ingredients necessary to become a core holding and we are excited about its long-term potential.”
9. Adobe Inc. (NASDAQ:ADBE)
Number of Hedge Fund Holders: 94
Decline in Share Price Over Past Six Months: 20.37%
Adobe Inc. (NASDAQ:ADBE) operates as a diversified software firm. A general lull around growth stocks has spooked investors and resulted in a massive slide in the share price of the firm over the past few months. However, the dip presents a buying opportunity as the firm recently posted market-beating earnings for the first fiscal quarter, growing cloud revenue, one of the biggest markets in the tech world, to more than $2 billion. The firm has also been steadily climbing the digital subscription revenue ladder.
On March 28, Argus analyst Joseph Bonner maintained a Buy rating on Adobe Inc. (NASDAQ:ADBE) stock with a price target of $575, highlighting that although the growth of the company was slowing, the “product lines and innovation engine remain solid”.
At the end of the fourth quarter of 2021, 94 hedge funds in the database of Insider Monkey held stakes worth $10.4 billion in Adobe Inc. (NASDAQ:ADBE), compared to 95 in the previous quarter worth $12.6 billion.
Here is what Richie Capital Group has to say about Adobe Inc. (NASDAQ:ADBE) in its Q2 2021 investor letter:
“Adobe Inc. (NASDAQ:ADBE) (up 24.8%) – In the last 15 years, Adobe Inc. (NASDAQ:ADBE) has transformed itself into a software behemoth, more than tripling its revenue since 2010. The company is famous for its namesake PDF-reader and photo-editing software Photoshop. However, Adobe Inc. (NASDAQ:ADBE) sells a full suite of software products through a recurring subscription model. Adobe Inc. (NASDAQ:ADBE) transitioned from selling boxed software to recurring subscriptions in 2013 and revenues have grown consistently since. Adobe Inc. (NASDAQ:ADBE) achieved $13B in revenue in 2020 with 88% Gross Margins.”
8. Block, Inc. (NYSE:SQ)
Number of Hedge Fund Holders: 96
Decline in Share Price Over Past Six Months: 39.96%
Block, Inc. (NYSE:SQ) is a payments technology firm. Even though the stock has registered a steep decline in share price recently, the analyst estimates for the larger payments industry remain as bullish as ever. According to Valuates Reports data, the online payment market will reach over $6 billion in size by 2027, growing at a compound annual growth rate of close to 15%. Block, Inc. (NYSE:SQ) is one of the leaders of the industry and expected to lead this growth.
On March 29, Susquehanna analyst James Friedman maintained a Positive rating on Block, Inc. (NYSE:SQ) stock with a price target of $240, noting that the integration of Afterpay with the Block platform would be a large revenue driver for the company in 2022.
At the end of the fourth quarter of 2021, 96 hedge funds in the database of Insider Monkey held stakes worth $5.9 billion in Block, Inc. (NYSE:SQ), compared to 98 in the preceding quarter worth $8.8 billion.
In its Q4 2021 investor letter, Baron Funds, an asset management firm, highlighted a few stocks and Block, Inc. (NYSE:SQ) was one of them. Here is what the fund said:
“High exposure to lagging E-commerce companies and underperformance of Block, Inc. (NYSE:SQ) (formerly Square, Inc.) in the Payments theme were the only material detractors from relative performance. E-commerce stocks lagged as a return to in-store shopping caused online shopping growth to moderate. Block, Inc. (NYSE:SQ) was the second largest detractor due to slowing growth in the Cash App segment and greater skepticism about the growth prospects for the pending acquisition of Afterpay.”
7. Alibaba Group Holding Limited (NYSE:BABA)
Number of Hedge Fund Holders: 115
Decline in Share Price Over Past Six Months: 20.04%
Alibaba Group Holding Limited (NYSE:BABA) provides technology infrastructure and marketing. The stock has suffered amid a broader Chinese crackdown against dual-listed firms. However, it remains one of the largest ecommerce firms in the world and veteran investors like Charlie Munger continue to view it in a positive light. Investors are also viewing the recent $25 billion share purchase program of the firm with interest. A Chinese government vow to stabilize markets has added further solidity to a bullish thesis for the firm.
Alibaba Group Holding Limited (NYSE:BABA) and other Chinese stocks are still trading in the red after the Public Company Accounting Oversight Board in the US said a deal with the Chinese government with regards to audits of dual-listed Chinese firms was still incomplete despite positive indications from Beijing in this regard. Both the Chinese and the US authorities have pledged to make the process easier, indicating that a deal is likely.
Among the hedge funds being tracked by Insider Monkey, Washington-based investment firm Fisher Asset Management is a leading shareholder in Alibaba Group Holding Limited (NYSE:BABA) with 14 million shares worth more than $2 billion.
In its Q4 2021 investor letter, Longleaf Partners Fund, an asset management firm, highlighted a few stocks and Alibaba Group Holding Limited (NYSE:BABA) was one of them. Here is what the fund said:
“Alibaba Group Holding Limited (NYSE:BABA) (-50%, -2.26%; -22%, -0.82%), the largest online retail platform in China, was another top detractor for the year and in the fourth quarter. Alibaba Group Holding Limited (NYSE:BABA) reported weak quarterly results and downgraded its sales outlook for the current fiscal year to 20- 23% growth, down from original guidance of 29-32% growth. Macro headwinds, weak consumer sentiment, regulatory scrutiny and competitive forces are having a larger than expected impact on overall retail sales and Alibaba’s market share. Notably, overall retail sales in China slowed down to a meager 5% growth in the September quarter. Slowing consumption, combined with stiff competition from new entrants in livestreaming ecommerce, have resulted in transitory deceleration in Alibaba’s core ecommerce growth trajectory. Additionally, the company is accelerating strategic investments in new initiatives, including Community Group Buying (Taocaicai), Taobao Deals, Local Consumer Services and International Ecommerce. These are future growth drivers but are depressing company’s earnings today. In December, we exited our full position in Alibaba Group Holding Limited (NYSE:BABA). This was more of a tactical move than a change in investment conviction. We initiated the position early in 2021, and the continued challenges in the second half of the year resulted in a loss that was material enough to be helpful from a tax distribution management point of view. We are sensitive to taxable gains and try to minimize where sensible, so we took advantage of the opportunity to reduce that liability and plan on revisiting the Alibaba Group Holding Limited (NYSE:BABA) opportunity in 2022. We continue to own Alibaba in our Asia Pacific strategy.”
6. Sea Limited (NYSE:SE)
Number of Hedge Fund Holders: 108
Decline in Share Price Over Past Six Months: 59.74%
Sea Limited (NYSE:SE) has interests in the digital entertainment, ecommerce, and digital financial service businesses. The company has huge stakes in the ecommerce business in places where US-based giant Amazon is still struggling to establish a foothold, like East Asia, Brazil, and Taiwan. A recent decision by the company to exit India, a highly competitive ecommerce market, also reflects the capital discipline of the management and frees up funds that can be diverted for growth in core markets.
On March 29, Morgan Stanley analyst Mark Goodridge also appreciated the decision of Sea Limited (NYSE:SE) to exit India as a “clear positive”, underling that the risk/reward in the Indian market was “no longer attractive” and the exit would also help the firm control ecommerce losses. The analyst has an Overweight rating on the shares with a price target of $220.
At the end of the fourth quarter of 2021, 108 hedge funds in the database of Insider Monkey held stakes worth $10 billion in Sea Limited (NYSE:SE), compared to 117 in the previous quarter worth $14 billion.
In addition to Meta Platforms, Inc. (NASDAQ:FB), Uber Technologies, Inc. (NYSE:UBER), and Netflix, Inc. (NASDAQ:NFLX), Sea Limited (NYSE:SE) is one of the tech stocks that institutional investors are picking up at bargain prices.
In its Q4 2021 investor letter, Tao Value, an asset management firm, highlighted a few stocks and Sea Limited (NYSE:SE) was one of them. Here is what the fund said:
“On the detracting side, our largest detractor is Sea Limited (NYSE:SE), which dragged 392 bps, is caught in a big rotation out of high growth stocks starting from November. Sea Limited (NYSE:SE) is among the core current holdings of “Mindful Compounder”, and appreciated 578% since initial purchases.”
5. PayPal Holdings, Inc. (NASDAQ:PYPL)
Number of Hedge Fund Holders: 110
Decline in Share Price Over Past Six Months: 53.44%
PayPal Holdings, Inc. (NASDAQ:PYPL) provides digital payments services. As the stock slides amid a larger lull around growth equities, the company has been busy beefing up initiatives in the crypto sector to take advantage of the rapid growth in the industry. The firm plans to raise fees on crypto trades of over $200 to “remove the complexity of percentage-based calculations for the consumer”. It has also been actively helping war-weary Ukrainians use the platform to transfer money across borders, highlighting the role crypto could play in conflicts of the future.
On March 30, Goldman Sachs analyst Michael Ng initiated coverage of PayPal Holdings, Inc. (NASDAQ:PYPL) stock with a Buy rating and a price target of $144, backing the firm to deliver earnings growth of more than 20% beyond 2022. The analyst cited the digitization of payments and ecommerce growth as some of the main growth drivers of the firm.
At the end of the fourth quarter of 2021, 110 hedge funds in the database of Insider Monkey held stakes worth $9.9 billion in PayPal Holdings, Inc. (NASDAQ:PYPL), compared to 123 in the preceding quarter worth $12.8 billion.
In its Q3 2021 investor letter, RGA Investment Advisors LLC, an asset management firm, highlighted a few stocks and PayPal Holdings, Inc. (NASDAQ:PYPL) was one of them. Here is what the fund said:
Stocks move with far more volatility to both the upside and downside than do the businesses themselves. Great businesses often go long periods of time without moving at all in the market, and then make large moves in very sudden fashion. Some people may try to anticipate exactly when these large moves will happen, but we think that is far more akin to astrology than sound business analysis…
We have owned shares in PayPal Holdings, Inc. (NASDAQ:PYPL) since the company was spun off from eBay in 2015. In aggregate, price has moved upward, quite powerfully during our tenure; however, this upside was essentially achieved in two somewhat brief pulses that cover less than half of our tenure with the stock. The rest of the time, price chopped around in ranges. These ranges are periods of tension, where the fundamentals continue to chug along but the stock price must digest. Some periods of tension are fairly quiet, while others include both steep up and down moves along the way. Some end up being brief resets, others might persist for two plus years. The key underlying truth is that if the business remains sound, and in the case of PayPal Holdings, Inc. (NASDAQ:PYPL), we think it is incredibly sound, the journey of rising stock prices will once again resume when the stock is ready. We are not market timers and thus cannot be sure as to when a stock might be ready, but value is inevitably the force that operates on a company’s stock and that force cannot help but exert its will over longer periods of time.
Thus, as we sit here today, a new year brings new opportunities, and the forward return profile of our portfolio looks as strong as it has been in some time.”
4. Salesforce.com, Inc. (NYSE:CRM)
Number of Hedge Fund Holders: 110
Decline in Share Price Over Past Six Months: 20.35%
Salesforce.com, Inc. (NYSE:CRM) is an application software firm. The company posted earnings for the fourth quarter of 2021 on March 1, beating market estimates on earnings per share and revenue by $0.09 and $80 million. The company also raised the guidance of the 2023 fiscal year to $32 billion against consensus estimates of $31 billion. As work from home trends grow, the company looks best positioned among peers in the tech industry to take advantage of digital workflows as it boosts a variety of top products, like Slack, in this regard.
On March 2, Wedbush analyst Daniel Ives kept an Outperform rating on Salesforce.com, Inc. (NYSE:CRM) stock with a price target of $275, appreciating the solid earnings beat of the firm and underlining that the risk/reward on the stock was very compelling owing to “cloud stalwart status and margin trajectory over the next few years”.
Among the hedge funds being tracked by Insider Monkey, Washington-based investment firm Fisher Asset Management is a leading shareholder in Salesforce.com, Inc. (NYSE:CRM) with 14.5 million shares worth more than $3.7 billion.
In its Q4 2021 investor letter, Polen Capital, an asset management firm, highlighted a few stocks and Salesforce.com, Inc. (NYSE:CRM) was one of them. Here is what the fund said:
“Salesforce.com, Inc. (NYSE:CRM) reported solid revenue growth, including accelerated growth in the company’s largest and most mature product, Sales Cloud. However, shares underperformed due to unexpected weakness in the company’s MuleSoft application integration business that we believe is attributable to temporary missteps in the company’s selling efforts. The company also provided slightly weak guidance for billed but not earned business growth. In our experience, this metric can be influenced by timing issues and is often not fully representative of underlying demand for the company’s offerings.”
3. Netflix, Inc. (NASDAQ:NFLX)
Number of Hedge Fund Holders: 113
Decline in Share Price Over Past Six Months: 36.92%
Netflix, Inc. (NASDAQ:NFLX) provides entertainment services. As the streaming growth of the firm slows, it has started to expand in other digital entertainment sectors, like gaming. As part of a push into gaming, the company announced on March 24 that it had agreed to acquire Boss Fight Entertainment, a gaming house founded in 2013 with branches in Allen, Austin and Seattle. Some of the famous games Boss Fight has worked on include Dungeon Boss, CastleVille, Age of Empires and Rise of Nations, among others.
On March 23, Cowen analyst John Blackledge maintained an Outperform rating on Netflix, Inc. (NASDAQ:NFLX) stock, noting that the firm was poised to grow revenue in the coming months if the results of a password sharing policy change test were positive. The analyst noted that the change in policy, if rolled out globally, would add over $1.6 billion in revenue for the company.
Among the hedge funds being tracked by Insider Monkey, Chicago-based firm Citadel Investment Group is a leading shareholder in Netflix, Inc. (NASDAQ:NFLX) with 4.6 million shares worth more than $2.4 billion.
In its Q4 2021 investor letter, Pershing Square Capital Management, an asset management firm, highlighted a few stocks and Netflix, Inc. (NASDAQ:NFLX) was one of them. Here is what the fund said:
“Amidst a volatile market backdrop in 2022, hedging gains provided the capital to fund the purchase of Netflix, Inc. (NASDAQ:NFLX). World’s leading streaming subscription video-on-demand company. Launched its category-pioneering streaming service in 2007. 222 million global paid subscribers in over 190 countries today. Vast and diverse library of high-quality content. Most Emmy-winning and Oscar-winning TV network / studio of 2021. Industry-leading volume of original content episodes released per quarter. High-performance culture led by a visionary management team. Subscription-based, highly recurring revenues. 26% annual streaming revenue growth and ~360 bps of average annual EBIT margin expansion over last three years. Modest financial leverage (1.5x Net Debt / EBITDA)…” (Click here to see the full text)
2. Uber Technologies, Inc. (NYSE:UBER)
Number of Hedge Fund Holders: 153
Decline in Share Price Over Past Six Months: 18.90%
Uber Technologies, Inc. (NYSE:UBER) owns and runs a ride-hailing platform. The company is trading at close to 30% below the price at the initial offering. This represents a compelling buying opportunity since the firm has used the pandemic year to dramatically transform the business, lowering operational costs and generating a profit for the first time in late 2021. It has also invested 12% of the market cap in net cash and equities. As post-pandemic demand surges, the shares have lots of room to go higher in the coming months.
On March 24, Stifel analyst Scott Devitt kept a Buy rating on Uber Technologies, Inc. (NYSE:UBER) stock with a price target of $48, highlighting that a recent deal by the firm to merge the software of competitors like Creative Mobile Technologies and Curb Mobility with Uber would “strengthen relationships with local municipalities and help with driver supply” in addition to reducing competition.
Among the hedge funds being tracked by Insider Monkey, Boston-based Altimeter Capital Management is a leading shareholder in Uber Technologies, Inc. (NYSE:UBER) with 1.5 million shares worth more than $482 million.
ClearBridge Investments, in its Q4 2021 investor letter, mentioned Uber Technologies, Inc. (NYSE:UBER). Here is what the fund has to say in its letter:
“We have also been looking for multiyear secular trends outside of the IT and Internet sectors to help us maintain a portfolio that can perform well in markets with varied sector or factor leadership. In particular, electrification of the global economy and the transition to electric vehicles (EVs) are areas where we continue to add exposure. We are investing in the brains behind EVs through NXP in the control center and Aptiv for safety features. Global rideshare leader Uber Technologies, Inc. (NYSE:UBER) will also be a key player in the transition from internal combustion engines to EVs.”
1. Meta Platforms, Inc. (NASDAQ:FB)
Number of Hedge Fund Holders: 224
Decline in Share Price Over Past Six Months: 32.79%
Meta Platforms, Inc. (NASDAQ:FB) is a diversified technology firm. It has pivoted from a social media-based presence to a more multiverse-focused entity in recent months, even changing the brand name from Facebook to Meta. The change has not helped the firm stop a massive slide in the share price, although the worst seems to be over as investors realize the marketing potential that the billions of users on platforms like WhatsApp, Facebook, and Instagram offer to businesses.
On March 25, UBS analyst Lloyd Walmsley kept a Buy rating on Meta Platforms, Inc. (NASDAQ:FB) stock with a price target of $280, highlighting that newsfeed changes from the firm would lead to higher monetization and a 6% upside in revenue in the first six months of 2022.
At the end of the fourth quarter of 2021, 224 hedge funds in the database of Insider Monkey held stakes worth $3.1 billion in Meta Platforms, Inc. (NASDAQ:FB), compared to 248 in the preceding quarter worth $3.8 billion.
In its Q4 2021 investor letter, Boyar Value Group, an asset management firm, highlighted a few stocks and Meta Platforms, Inc. (NASDAQ:FB) was one of them. Here is what the fund said:
“We continued to keep our learnings from 2020 in mind during the quarter as we sought to increase the up capture of the portfolio. We also made adjustments to the portfolio’s top 10 holdings to increase the participation of select stocks, including Meta Platforms, Inc. (NASDAQ:FB), while trimming our weighting to stable names, which now represent 47% of the portfolio. Our repositioning has been encouraging so far with the portfolio performing better on up days in the market while maintaining good down capture during more turbulent sessions.”
You can also take a peek at 10 Best Healthcare Dividend Stocks to Buy Now and 10 Dividend Stocks with Over 20 Years of Dividend Increases.
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Disclosure. None. 10 Famous Tech Stocks Trading At Discount Today is originally published on Insider Monkey.
