The market’s getting volatile, but it’s still trading close to its recent all-time highs. Are you waiting for the market to take a big hit before putting your money on the sidelines to work? Well, a lot of last year’s biggest stars have already crashed.
Shares of Alibaba Group Holding (NYSE:BABA), Zoom Video Communications (NASDAQ:ZM), and Pinterest (NYSE:PINS) have all plummeted at least 40% since hitting all-time highs. The markdowns seem overdone. Let’s take a closer look.
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1. Alibaba
Thursday should’ve been a big day for China’s online retailers. It’s Singles’ Day! Alibaba created the shopping holiday that takes place every year on Nov. 11 — called Singles’ Day because of the 11/11 date — but it has since been widely adopted by smaller e-tailers.
Singles’ Day is hitting different this year. China’s government push for “common prosperity” finds it unfashionable to tout commerce and consumption. Alibaba is highly unlikely to match the $74 billion it rang up in sales during last year’s “Double 11” celebration.
Alibaba enters Singles’ Day trading 49% below the all-time high it hit late last year. Investors have steered clear of China’s growth stocks in the wake of the government’s crackdown on several industries, but the real bargain for Singles’ Day could be shares of Alibaba itself. It has grown revenue by at least 32% every year over the past decade. Even now as Alibaba grapples with the COVID-19 crisis and the country’s common prosperity objectives, trailing revenue has climbed 40%.
2. Zoom Video
The rise and fall of Zoom Video is well known. The videoconferencing platform skyrocketed in popularity during the early months of the pandemic when in-person classes, work meetings, and gatherings of friends and family weren’t safe. Now that we’re largely vaccinated and case counts are lower is there really a future for Zoom?
The market seems to think that the future will be bleak. Like Alibaba, shares of Zoom peaked 13 months ago. Zoom stock has plummeted 57% since that high. The twist here is that Zoom is still growing. Revenue rose 54% in its latest quarter. Sure, revenue is decelerating. We’re not going to return to the triple-digit top-line growth that Zoom posted in each of the five previous quarterly reports.
However, Zoom is still growing in the recovery climate. Video meetings will continue to be a cost-effective way to gather and get things done. Zoom is fleshing out its offerings, and a recently fumbled acquisition attempt won’t stop the evolutionary process. There was a crazy time last year when Zoom was trading for more than 100 times trailing revenue. The one-two punch of heady sales growth and the cascading stock price finds that multiple whittled down to just 20 right now.
3. Pinterest
A year ago we were leaning on Pinterest to get crafty. The visual discovery engine was a valuable resource for recipes, decorating tips, and daydreaming about…
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