10 Best NASDAQ Stocks Under $20 to Buy

6. ZoomInfo Technologies Inc. (NASDAQ:ZI)

Number of Hedge Fund Holders In Q2 2024: 43

Share Price: $10.37

ZoomInfo Technologies Inc. (NASDAQ:ZI) is a software as a service (SaaS) company that enables businesses to manage their marketing operations. Its stock is down by 42% year to date, which underscores the premium that SaaS investors place on growth and cost control. In August, ZoomInfo Technologies Inc. (NASDAQ:ZI)’s dropped by 16% immediately after the firm’s Q2 results saw it miss revenue estimates of $308 million by posting $291.5 million in the segment. It also guided down full year revenue guidance by 5%. Key to ZoomInfo Technologies Inc. (NASDAQ:ZI)’s troubles is its exposure to small and medium businesses, which struggle when rates are high and the economy is slowing. Naturally, it also potentially primes the stock for tailwinds if economic conditions improve. ZoomInfo Technologies Inc. (NASDAQ:ZI) is also trying to diversify its revenue base and reported that in Q2, its contracts valued higher than $100,000 had grown for the first time since Q4 2022. Further write offs during the second half related to small businesses could spell more trouble for ZoomInfo Technologies Inc. (NASDAQ:ZI)’s shares.

Baron Funds mentioned ZoomInfo Technologies Inc. (NASDAQ:ZI) in its Q4 2023 investor letter. Here is what the fund said:

“We were too slow to sell when the probability of a likely thesis change dictated action over inaction. Each investment is like a puzzle. Different pieces are missing in different puzzles. Our process is deliberately slow and is built on collecting and analyzing as much information as possible and building conviction over time. In a highly stressful environment with a wide range of outcomes, a recognized lack of balance with emotions running high, postponing “bad decisions” is often the correct course of action except, when there is evidence of a potential or likely thesis change on the negative side in a bear market. We were often too slow and too timid in running for the exit. For example, when a company’s revenues prove to be less sticky during times of stress despite high average retention rates. ZoomInfo Technologies Inc. (NASDAQ:ZI), the business-to-business (B2B) sales data and software provider readily comes to mind, where we made a mistake selling the stock too slowly, as we did not fully appreciate the extent to which the company oversold unused licenses to its customers, which exacerbated the slowing demand environment, creating a whiplash effect as the license inventory was used up later on, causing revenue growth to decelerate materially.”