It's been an ugly year for tech stocks. After a two-year boom during the pandemic, concerns about rising interest rates, a possible recession, and inflated valuations have wiped away most of those gains.
However, long-term investors know that stock market sell-offs can be buying opportunities, so it makes sense to look for bargains among stocks that have fallen sharply.
Of the more than 3,000 stocks in the Nasdaq Composite, the four stocks below are the worst-performing ones, with market caps of $1 billion or more.
| Company (Ticker) | Performance | Industry |
|---|---|---|
| GoodRx (NASDAQ: GDRX) | -85.2% | Healthcare |
| Novavax (NASDAQ: NVAX) | -85.1% | Biotech |
| Upstart (NASDAQ: UPST) | -83.9% | Fintech |
| Matterport (NASDAQ: MTTR) | -82.9% | Technology |
Data source: Finviz.com.
Let's take a look at each of these companies and see if any of them are worth buying today.
1. GoodRx: A pharmacy disruptor
Like most of the IPO class of 2020 and 2021, GoodRx is having a rough 2022. The company offers a price comparison tool for people to compare prescription drug prices. It's free for consumers, and makes money from advertising and referral fees.
However, the stock has plunged this year as valuations have compressed among tech stocks, and its revenue growth has slowed significantly, clocking in at just 9% in the most recent quarter. The company is profitable on an adjusted basis, but its customer base is actually shrinking as of its most recent quarter, with monthly active customers falling from 6 million to 5.8 million.
In that context, it makes sense why the stock has plunged. The growth story has fizzled. Until customer growth returns, this stock is probably best avoided.
2. Novavax: The COVID vaccine bonanza fades
Novavax was one of the biggest winners in the rally in COVID-19 vaccines in 2020 and 2021. In fact, the stock was up more than 6,000% from the start of 2020 at one point, but has since given back much of those gains as the pandemic has faded and demand for vaccines faded along with it.
As a result, Novavax's revenue has actually declined, falling 38% in the second quarter to $168 million. It also reported a wide net loss of $510 million. Though Novavax has other vaccines in the pipeline, it effectively lost the COVID vaccine race against Pfizer and Moderna, and COVID vaccine sales are now falling.
At this point, Novavax seems like one of several high-risk, unprofitable biotech companies.
3. Upstart: A tech-first approach to lending
Like Novavax, Upstart stock boomed in 2021 as sales soared on widespread adoption for its artificial intelligence (AI)-based technology. Upstart offers an AI lending platform that predicts creditworthiness and efficiently matches borrowers with lenders.
However, with interest rates soaring in 2022, lender demand for the technology has cooled off. Its revenue growth rate has come back down to earth, increasing 18% to $228 million in the second quarter. Adjusted EBITDA also fell sharply as the company increased investments in the business even as revenue declined.
Upstart's technology hasn't been through a full credit cycle, so the stock remains risky. However, the upside potential is appealing -- its profitability should return in the next bull market as long as the technology holds up. At the current price, Upstart looks attractive for risk-tolerant investors.
4. Matterport: More than just real estate tech
Matterport, which provides 3D cameras that allow users to virtually walk through a space, is best known as a real estate tool, popular during the pandemic as a way allow to virtual visits. Like other real estate stocks, it's plunged this year after soaring through much of 2021. In its most recent quarter, revenue actually declined due to a pull-back in one-time product sales, with overall revenue down 3.5% to $28.5 million.
Matterport continues to grow its subscription business, one good sign for the company, though it is deeply unprofitable. The company is a leader in virtual spaces, but it faces increasing competition from the likes of real estate marketer Zillow and chip giant Nvidia, among others, and the stock isn't cheap.
Still, this is a new industry with a range of applications, and Matterport has considerable upside potential if it can emerge as a winner in virtual tours. If it can fend off competition and keep growing through the bear market, the stock should be an outperformer.
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Jeremy Bowman has positions in Upstart Holdings, Inc. The Motley Fool has positions in and recommends GoodRx Holdings, Inc., Matterport, Inc., Nvidia, Upstart Holdings, Inc., Zillow Group (A shares), and Zillow Group (C shares). The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
