With high expectations built into the share price of many promising companies, delivering something less than perfect can cause the share price to fall. This appears to be the case for a trio of companies that have seen their stock prices fall recently, despite fundamentally strong growth metrics.
These three companies have promising growth that seems unstoppable, and each is trading for less than $ 100.
Operating in South Korea, Coupang (NYSE: CPNG) intends to become this country’s version of Amazon. After more than tripling its revenue in the past two years, the company has quickly grown into one of the fastest growing e-commerce companies in the world.
However, since its IPO in March, Coupang has seen its share price fall by more than 40% amid concerns over its working conditions and a warehouse fire at a logistics center in June. As miserable as the fire is, the company and CEO Bom Kim are determined to come back stronger. He says he has added 600 “security staff” and spent $ 200 million on security initiatives since the start of 2020.
Ultimately, Coupang will have to continue to prove that he puts safety before sales, but his four-star (out of five) rating and 88% employee approval rating for Kim via anonymous ratings on Glassdoor, indicate a healthy culture.
Operationally, Coupang has looked unstoppable, recording 15 straight quarters of constant currency revenue growth of more than 50% year-over-year. Despite growing revenue at an execution rate of over $ 18 billion per year, management expects the South Korean e-commerce market to grow to $ 530 billion by 2024, highlighting the remaining massive growth avenue for the company.
Currently exhibiting a market cap of $ 46 billion, Coupang’s remaining market opportunity gives it plenty of room to function for the foreseeable future, giving investors with a long-term perspective plenty of optimism.
Having fallen by around 40% in the past six months, Pinterest (NYSE: PINS) is a classic example of a fundamentally sound company whose stocks are squashed due to less than perfect metrics. Due to the 5% drop in the company’s monthly active user (MAU) in the United States in the last quarter, investors saw Pinterest drop more than 15% after July profits. While this drop in MAUs is concerning, the company has increased the number of mobile users in the United States, who are generally more engaged with the app than their desktop counterparts.
Thanks to this growing engagement, Pinterest increased its revenue by 125% year-over-year for the second quarter and average revenue per user (ARPU) by 89% in the same period. If ARPU’s growth continues to grow at a rate well above the increase in its expenses, profitability should start to multiply exponentially over the long term. Speaking on the continued monetization of engagement, CFO Todd Morgenfeld said on the conference call, “While we are still in the early stages of fully monetizing our purchase engagement, we believe that we have the right sales coverage model, and we deliver conversions to advertisers looking for sales on the platform. “
In fact, the company is quickly approaching a tipping point to achieve consistent profitability, posting a net profit of $ 161 million in the past 12 months.
Pinterest’s current market cap of $ 33 billion can dramatically underestimate the inspiration Pinners receive from using the app focused on the company’s aspirations.
The commercial counter
Before 2021, The commercial counter (NASDAQ: TTD) the action seemed unstoppable, growing by more than 3,000% in four years, fueled by an almost 300% increase in revenue over the same period. The ad-buying platform quickly increased its market capitalization, but has seen its share price stagnate since the start of 2021 due to slower growth and increased spending.
However, releasing second quarter results in August, The Trade Desk reported further acceleration in revenue growth and a 101% year-over-year sales increase, noting that the focus on Connected TV (CTV) is rapidly gaining ground. Representing the company’s fastest growing chain, Founder and CEO Jeff Green referred to the growth of the segment during the second quarter earnings call, saying that “the number of brands spending over one million in CTV dollars on our platform has already more than doubled last year. year.”
Additionally, the company has grown its non-North American revenue from 6.5% of its total to 13% since 2015, demonstrating its desire and ability to become a global advertising platform. With two-thirds of global ad spend coming from outside of North America, The Trade Desk has a huge international growth track ahead of it.
The Trade Desk appears operationally unstoppable, making the stock’s disappointing performance in 2021 a potential entry point for investors.
This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are heterogeneous! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.