In this article, we discuss 5 beaten-down tech stocks to buy today for long-term gains. If you want to see more stocks in this selection, click 10 Beaten-Down Tech Stocks to Buy Today for Long-Term Gains.
5. Bill.com Holdings, Inc. (NYSE:BILL)
Number of Hedge Fund Holders: 58
YTD Decline in Share Price as of June 8: 42.63%
Bill.com Holdings, Inc. (NYSE:BILL) was founded in 2006 and is headquartered in San Jose, California. The company offers cloud-based software that simplifies and automates back-end financial algorithms for small and mid-sized businesses around the world. The company posted a Q1 revenue of about $167 million, outperforming estimates by $9 million. Year-to-date, the stock has stopped about 43% as of June 8.
KeyBanc analyst Josh Beck on May 31 reiterated an Overweight rating on Bill.com Holdings, Inc. (NYSE:BILL) but lowered the firm’s price target on the stock to $175 from $225. The analyst advised investors to open positions in Bill.com Holdings, Inc. (NYSE:BILL) amid the rising rates and recession-driven pull-back, as he sees the opportunity to own an elite tech company in a market that is less than 5% penetrated. Bill.com Holdings, Inc. (NYSE:BILL) offers market leadership and network effects, meaningful execution-driven synergies, good management, and a robust mix of growth and profitability, the analyst added.
According to Insider Monkey’s Q1 data, 58 hedge funds were bullish on Bill.com Holdings, Inc. (NYSE:BILL), down from 65 funds in the earlier quarter. Gabriel Plotkin’s Melvin Capital Management held the biggest position in the company, comprising 1.6 million shares worth $367.8 million.
Here is what Alger Mid Cap Focus Fund has to say about Bill.com Holdings, Inc. (NYSE:BILL) in its Q4 2021 investor letter:
“Bill.com Holdings, Inc., was among the top detractors from performance. Bill.com provides cloud-based software solutions that simplify, digitize, and automate complex back-office financial operations for small and medium size businesses. Its software helps customers to generate and process invoices, streamline approvals, send and receive payments, synchronize data with their accounting system and manage their cash.”
4. Coinbase Global, Inc. (NASDAQ:COIN)
Number of Hedge Fund Holders: 46
YTD Decline in Share Price as of June 8: 72.44%
Coinbase Global, Inc. (NASDAQ:COIN) is an American financial infrastructure and technology provider for the global crypto economy. The stock has taken a massive beating year-to-date, down 72.44% as of June 8. However, it is one of the leading fintech forces in the crypto universe, which is an essential segment of the metaverse. This makes Coinbase Global, Inc. (NASDAQ:COIN) one of the top beaten-down tech stocks to buy for long-term gains.
On June 6, after Coinbase Global, Inc. (NASDAQ:COIN) announced plans to extend its hiring freeze for new and backfill roles for “the foreseeable future”, Cowen analyst Stephen Glagola observed that the company had a liquidity of $6.3 billion at the end of March 2022 and he believes it “remains well capitalized to navigate through a crypto winter”. The analyst reiterated an Outperform rating and an $85 price target on Coinbase Global, Inc. (NASDAQ:COIN) shares.
According to Insider Monkey’s database, 46 hedge funds were bullish on Coinbase Global, Inc. (NASDAQ:COIN) at the end of Q1 2022, compared to 57 funds in the last quarter. Cathie Wood’s ARK Investment Management is the biggest shareholder of the company, with a position worth $1.32 billion.
Here is what Longleaf Partners Fund has to say about Coinbase Global, Inc. (NASDAQ:COIN) in its Q4 2021 investor letter:
“We also have seen plenty of IPO/SPAC craziness showing both that private players need public markets more than they admit and that there is more volatility embedded in these newer companies than a private quarterly mark might admit. As for how efficient both the private and public markets are, we would encourage you to really delve into some of those multi-hundred-page S1s for many of the newest public companies to see the huge gap between the last valuation at which the company was funded and/or granted shares to its executives and the often much higher price at which the company went public – Coinbase is a prime example.”
3. Cloudflare, Inc. (NYSE:NET)
Number of Hedge Fund Holders: 44
YTD Decline in Share Price as of June 8: 56.44%
Cloudflare, Inc. (NYSE:NET) is a California-based cloud services provider that delivers cloud-based security, content and performance solutions, reliability and internal infrastructure solutions, and developer-based solutions to technology, healthcare, financial services, consumer and retail, non-profit, and government clients.
Cloudflare, Inc. (NYSE:NET) stock has declined over 56% YTD as of June 8. The company’s Q1 revenue of $212.17 million topped analysts’ consensus estimates by $6.51 million, rising more than 50% for the 7th quarter in a row. The Q1 report points towards ongoing strength in cloud migration as well, making the stock a significant long-term play. At the end of May, the company also joined the European Union’s Cloud Code of Conduct General Assembly, further strengthening its future prospects.
Jefferies analyst Brent Thill on May 23 maintained a Hold rating on Cloudflare, Inc. (NYSE:NET) but lowered the price target on Cloudflare, Inc. (NYSE:NET) to $55 from $75, citing challenging macro headwinds and the threat of recession.
Among the hedge funds tracked by Insider Monkey, D E Shaw held a prominent stake in Cloudflare, Inc. (NYSE:NET) at the end of Q1 2022, comprising 1.5 million shares worth $184 million. Overall, 44 hedge funds were bullish on the stock at the end of March.
Here is what Baron Fifth Avenue Growth Fund has to say about Cloudflare, Inc. (NYSE:NET) in its Q1 2022 investor letter:
“Cloudflare, Inc., another new purchase during the quarter, is a web infrastructure and website security provider. Cloudflare disrupts legacy networking vendors by enabling customers to rent their network solutions in the cloud (and pay for usage) instead of buying firewalls, load balancers and secure web gateway devices. Using a global network in over 100 countries, Cloudflare delivers content and security within 50 milliseconds of 95% of the internet-connected population in the world. Shares contributed 12bps to results on impressive fourth quarter earnings as it continues to successfully layer high-value services such as zero trust, network services, and edge programmability on top of its modern global network. The company is attracting a broader set of investors as Cloudflare now matches durable 50%-plus top-line growth (this was the fifth straight quarter of 50%-plus revenue growth, and 56% current bookings growth suggests strong durability into 2022) with positive operating margins and break-even free cash flow. We believe that Cloudflare will benefit from long-duration growth disrupting a $100 billion addressable market across application services, network services, and zero-trust services.”
2. Zoom Video Communications, Inc. (NASDAQ:ZM)
Number of Hedge Fund Holders: 43
YTD Decline in Share Price as of June 8: 37.48%
Zoom Video Communications, Inc. (NASDAQ:ZM) is an American communications company that offers video, voice, chat, and content sharing options to users around the world. Although the stock became mainstream during the pandemic years and began losing value in 2022, it is positioned to grow as higher fuel costs and employees demanding flexible working conditions will likely lead to work-from-home/hybrid work mandates once again.
Daiwa analyst Stephen Bersey on May 31 double upgraded Zoom Video Communications, Inc. (NASDAQ:ZM) to Outperform from Underperform with a price target of $121, up from $107. The recent pullback in the stock offers an attractive entry point, the analyst told investors. He likes Zoom Video Communications, Inc. (NASDAQ:ZM)’s primary business and noted that growth expectations now “seem more realistic”. Zoom Video Communications, Inc. (NASDAQ:ZM)’s “solid execution” in Q1 adds to the analyst’s “positive incremental conviction” that demand for Zoom’s core business is stabilizing.
According to Insider Monkey’s Q1 data, 43 hedge funds were long Zoom Video Communications, Inc. (NASDAQ:ZM), compared to 48 funds in the prior quarter. Jim Simons’ Renaissance Technologies held one of the largest positions in the company, consisting of 6.4 million shares worth $756 million.
Here is what Artisan Partners has to say about Zoom Video Communications, Inc. (NASDAQ:ZM) in its Q1 2021 investor letter:
“We concluded our campaigns in Zoom Video Communications. We have been paring our position in Zoom for several quarters, anticipating the reduced need for video conferencing as vaccination rates climb and people return to their workplaces. That said, we believe there is a strong case to be made that the pandemic has prompted a permanent inflection in video conferencing’s importance—sustainably higher remote work arrangements, more online learning and less business travel. Furthermore, the company’s dramatically expanded user base (up 485% YoY in Q3) positions it well to cross sell additional services, Zoom Phone in particular. The long-term future remains bright, but we decided to end our successful investment campaign in favor of opportunities in our pipeline with more attractive near-term growth prospects.”
1. Pinterest, Inc. (NYSE:PINS)
Number of Hedge Fund Holders: 56
YTD Decline in Share Price as of June 8: 42.74%
Pinterest, Inc. (NYSE:PINS) is an American company operating a visual discovery engine, where individuals and content creators post lifestyle inspiration ideas in the form of ‘pins boards’. As of June 8, Pinterest, Inc. (NYSE:PINS) stock has dropped about 43% year-to-date. However, it remains a strong medium among marketers, content creators, and influencers to connect with their audience. In addition to that, DIYs become quite popular when people face a recessionary financial crunch, which can potentially increase traffic on the Pinterest, Inc. (NYSE:PINS) platform.
On June 1, Morgan Stanley analyst Brian Nowak reaffirmed an Equal Weight rating on Pinterest, Inc. (NYSE:PINS) but lowered the price target on the shares to $21 from $28. He slashed estimates across online ad and e-commerce companies as he adopted a more conservative base case to reflect higher macro and micro uncertainty, the analyst told investors. He now models approximately 13% and 16% year-over-year online ad growth and about 8% and 10% e-commerce growth in 2022 and 2023, respectively.
According to Insider Monkey’s data, 56 hedge funds were bullish on Pinterest, Inc. (NYSE:PINS) at the end of March 2022, with combined stakes worth $1.25 billion. Harris Associates is the leading position holder in the company, with 18.5 million shares worth $456.7 million.
Here is what Oakmark Fund has to say about Pinterest, Inc. (NYSE:PINS) in its Q1 2022 investor letter:
“We previously had an opportunity to own Pinterest (NYSE:PINS) when the stock sold off during the Covid-19-related downturn, and we were pleased to be able to invest in the company once again at an attractive price during the quarter. Pinterest is an online personal discovery tool that people use to find ideas based on their tastes and interests. Unlike most social media companies, the objectives of users and advertisers are fundamentally aligned on Pinterest. Users find a positive and useful product discovery experience, and advertisers find an audience with high commercial intent and the ability to integrate ads naturally. Although Pinterest had more than 430 million global users as of year-end, the company is still in the early days of monetizing its platform. We believe that its shares trade well below fair value on conventional metrics, such as enterprise value to revenue, as well as when we benchmark its ultimate revenue and margin potential against more mature internet companies.”
You can also take a look at 10 Best Undervalued Dividend Stocks To Buy and 10 Best Recession Stocks To Buy.
