The , which tracks the 100 largest companies listed on the tech-heavy , has had one of the worst starts to a year on record. The Federal Reserve's plans to hike rates so far in 2022 have fallen 8% so far, sparking an exodus of high-growth technology stocks with frothy valuations.
Despite the recent turmoil, here are three high-growth tech companies that have tried to bounce back from their recent sell-off. All three will announce their latest financial results later this month.
1. block
Percentage of ATH: -55.9%
Market capitalization: $73.8 billion
Stocks of Square-parent Block (NYSE:), the mobile payments specialist run by former Twitter CEO Jack Dorsey, were one of the big winners from the COVID pandemic as the accelerated shift to e-commerce fueled a strong growth of its Cash App ecosystem.
However, the digital payment provider, which changed its company name to Block late last year, has seen its shares endure some turbulence lately amid sell-offs in high-growth tech companies. Year-to-date, Block shares have lost 21%, significantly underperforming the broader market since the start of 2022.
SQ – about 56% below its all-time high of $289.20 reached on August 5 – Tuesday's session ended at $127.61, giving the San Francisco, California-based financial technology company a market value of $ 73.8 billion.
Block recorded disappointing profits and sales at the beginning of November. It is scheduled to report fourth quarter financial results after the US market closes on Thursday, Feb. 24.
Consensus calls for EPS of $0.23 per share, down 28% from the same period a year ago, mainly due to the recent acquisition of the buy-now-pay-later (BNPL) Afterpay company worth $29 billion. Revenue is expected to grow 30% Y-o-Y to $4.09 billion, benefiting from strong performance in the Cash App mobile payment service.
Investors will pay close attention to the growth of gross payment volume (GPV) – the value of all transactions processed on the fintech company's platform. The key metric rose 43% year-over-year to $45.4 billion in the last quarter.
Given the Square owner's leadership position in the mobile payment processing industry, Block could finally see its stock price plummet after a brutal sell-off, losing nearly half of its market value in the past three months.
Not surprisingly, 29 of the 42 analysts surveyed by Investing.com rate SQ stocks as "outperforming," representing a whopping 95% increase from current levels of $248.84/share.
Chart: Investing.com
2. Cloudflare
Performance so far: -22.1%
Percentage of ATH: -53.8%
Market Capitalization: $32.9 Billion
Percentage of ATH: -53.8%
Market Capitalization: $32.9 Billion
As investors increasingly turn away from extremely high-value tech companies, Cloudflare (NYSE:) stock has struggled in recent months. After making significant gains of 345% and 73%, respectively, during the COVID outbreak in 2020 and 2021, Cloudflare, which provides web security and infrastructure services, has seen its inventory fall by about 22% year-to-date.
NET is nearly 54% below its all-time high of $221.64 on Nov. 18. At the close of yesterday's session, NET dropped to $102.43. At current valuations, the market cap of the cloud-based network and cybersecurity service provider in San Francisco, California is $32.9 billion.
Cloudflare's sales shattered their previous record, with optimistic guidance for the future. Investors will find out after the closing bell on Thursday, Feb. 10, whether the company was able to sustain its upward trajectory as analyst estimates call for the cloud networking and security solutions provider to deliver breakeven earnings per share, improving from a loss of $0.02 per share in the same period a year ago.
Revenues are expected to grow 47% year-over-year to $185.1 million, driven by strong demand for its web security, content delivery and business network services and solutions.
Beyond the top-and-bottom numbers, investors will focus on Cloudflare's large number of customers to see if it can sustain its rapid growth rate. The network security company said the number of customers spending at least $100,000 annually increased 71% Y-o-Y to 1,260 in the third quarter.
In our view, the shares of the once-rapid growth darling look set to rise again in the coming weeks and months, given strong demand for its products and services in the current environment.
Indeed, 12 out of 24 analysts surveyed by Investing.com are bullish on net stocks, forecasting a 66% rise in current prices to $170.71/share. Only one analyst surveyed has a 'sell' rating to his name.
Chart: Investing.com
3. Palantir Technologies
Performance to date: -22%
Percentage of ATH: -68.4%
Market capitalization: $28.4 billion
Palantir Technologies (NYSE:), which provides data analytics software and services to government agencies and large corporations, has had a tumultuous year as the former market favorite fell out of favor with investors. Shares of the analytics software provider have lost 22% so far this year amid an aggressive reset in valuations in the tech space.
PLTR ended yesterday's session at $14.20, about 68% below its all-time high of $45.00 in January 2021. At current levels, the data mining company founded by Peter Thiel in Denver, Colorado has a market cap of $28.4 billion.
Palantir has surpassed estimates for earnings and sales in every quarter since its IPO in September 2020. It plans to report fourth quarter results ahead of the opening bell on Tuesday, February 15. Consensus estimates call for earnings per share of $0.03, down 50% from earnings per share of $0.06 in the same period a year ago. Revenue is expected to grow approximately 30% year-over-year to $417.6 million, benefiting from strong demand for its data analytics software tools from government agencies around the world.
As such, investors will continue to focus on growth in Palantir's core businesses, which account for more than half of the enterprise software company's total revenue. The segment saw third-quarter revenue rise 34% from a year earlier to $218 million.
US commercial revenues and the total number of commercial customers, up 103% and 46% respectively in the , will also be interesting as the big data company looks to diversify its customer base. With 203 customers, Palantir wants to expand into several other sectors such as healthcare, energy and manufacturing.
We believe the significant decline in the shares of Palantir, whose market capitalization has shrunk by nearly two-thirds, has created a buying opportunity in the divested name given the solid outlook for accelerated revenue growth driven by booming demand for are data analysis software tools.
According to Investing.com, the average price target of PLTR stock analysts is around $24, representing a 66% increase from current levels over the next 12 months.
Chart: Investing.com
