There is no doubt that many tech investors are frustrated by the current bear market. With many growth names down more than 80%, any comeback seems far-fetched.
However, the market has recovered from every previous bear market and is likely to recover from the current one. This means that investors should think in advance Technology stock growth It can lead to recovery. While many stocks can eventually get the job done, two who have positioned themselves for such leadership are MercadoLibre (milli -4.83%) And the Twilio (TWLO -4.87%).
MercadoLibre is a growth leader because it has mastered the art of fostering new business segments and growing from their challenges. It was the pioneer of e-commerce in Latin America starting in 1999.
However, I have faced the challenge of selling online in cash-based communities. To this end, I created MercadoPago to help consumers make purchases on the MercadoLibre website. However, her popularity made her somewhat PayPal Latin America where the company has made it available for generalized financial technology purposes.
The company faced another challenge shipping its merchandise, a difficulty that likely played a role in creating the Mercado Envios. This part packs and delivers goods to customers, much like Amazon or Shopify. MercadoLibre has also leveraged its e-commerce presence to sell ads, which should serve it well if the success of Amazon ads is any indication.
Despite the economic slowdown and high inflation, its revenue of $4.8 billion in the first half of the year was up 57% compared to the same period in 2021. Net income for the first two quarters of the year was $188 million. That’s up from $34 million over the same time frame as the company limited cost-revenue growth.
Despite this success, it is not Too late to buy shares of MercadoLibre. Investors have battered MercadoLibre along with other growing tech stocks, and it’s 50% lower than its high. Its price-to-sales (P/S) ratio is 5 higher than sea ltd Sales multiplier 3. But MercadoLibre has outlived many of its peers’ growth woes, a factor it should put in place to return to growth faster once conditions improve.
Admittedly, few would see Twilio capable of running a bull market at this point. Its shares are selling at more than 80% off, to an early 2021 high of $457 per share. Furthermore, the company has just announced plans to lay off 11% of its workforce. Ongoing losses and a noticeable shortage of moat may affect investor sentiment.
Despite these perceptions, they are worth a closer look. Twilio is a Communications Platform as a Service (CPaaS) provider, providing APIs that accommodate text, voice, video, and email communications on a single platform.
Its position as a first mover has helped attract clients such as UberAnd the DoorDashAnd the Airbnb. Since switching providers could mean an extended outage for such vital services, they are unlikely to turn to a competitor.
Additionally, products like Flex and Segment allow for easier customer connections and data portability, giving Twilio a competitive advantage. These offerings, along with the expected industry growth, could be a tailwind for Twilio. Future Market Insights forecasts a compound annual growth rate for CPaaS of 25% through 2032, making it a $59 billion market by that year.
Twilio claims only a small portion of this market now. In the first half of 2022, its $1.8 billion revenue rose 44%. That’s somewhat slower than the 61% growth in 2021 or a 55% increase in 2020. The rapid growth in expenses, especially cost of revenue, means losses in the first two quarters rose to $544 million, up from 434 million. dollars in the first half of 2021.
However, given that Twilio only sells four times as much, investors may find it easier to forgive sluggish sales. In February 2021, new buyers paid up to 36 times sales. This is nine times higher than today, which likely indicates that sellers have overreacted to a slightly lower rate of revenue growth.
Twilio may look uncertain as losses mount and restructure amid layoffs. But once growth recovers, it is likely that more companies will turn to CPaaS products, which means that it may now be Time to buy Twilio stock.
John Mackie, CEO of Whole Foods Market, an Amazon company, is a member of The Motley Fool’s Board of Directors. Will Healy He has positions at MercadoLibre, PayPal Holdings, Shopify, and Twilio. Motley Fool has positions at Airbnb, Inc. , Amazon, and DoorDash, Inc. , MercadoLibre, PayPal Holdings, Sea Limited, Shopify and Twilio. Motley Fool recommends Uber Technologies and recommends the following options: long January 2023 calls worth $1,140 on Shopify and short January 2023 calls worth $1,160 on Shopify. Motley Fool has a profile Disclosure Policy.