BILL Stock's Sharp Decline: Opportunity or Overcorrection?

The 38% one-year decline in BILL Holdings (BILL) has sparked debate among investors: Is this a market overreaction to macroeconomic headwinds, or does the stock reflect a fundamentally weakened SaaS growth story? For long-term, value-oriented investors, the answer may lie in the growing disconnect between bearish sentiment and the company's resilient financial performance, strategic innovations, and undervaluation metrics.

A Bear Market in a Bull Story

BILL's decline has been driven by broader market rotations out of high-growth software stocks and macroeconomic pressures, including inflation and high interest rates, which have dampened small business spending. However, recent data suggests a potential inflection point. In Q4 2025, the company reported revenue of $383.3 million, exceeding expectations, and delivered a 16% year-over-year (YoY) core revenue growth rate. Additionally, Q3 2025 payment volume reached $89 billion, underscoring the platform's operational scale according to data. These metrics contrast sharply with the stock's 45.1% one-year drop, raising questions about whether the market is underestimating the company's long-term potential.

Valuation Metrics Suggest a Compelling Entry Point

BILL's current valuation appears disconnected from its fundamentals. A discounted cash flow (DCF) model estimates an intrinsic value of $91–$92 per share, implying a 39–41% undervaluation relative to its recent price near $55 according to analysis. The company's Price to Sales (P/S) ratio of 3.57–3.7x also lags significantly behind the Software industry average of 4.87–4.9x and broader fintech peer averages of ~11x as reported. These metrics, combined with projected free cash flow growth from $320.6 million in the last twelve months to $828.2 million by 2035 according to earnings data, suggest a compelling value proposition for investors with a multi-year horizon.

Strategic Conviction from Institutional Investors

Totem Point Management's $3.77 million investment in Q3 2025, representing a 3.36% allocation in its concentrated portfolio, underscores institutional confidence in BILL's fundamentals despite the stock's decline according to investment records. The firm's rationale centers on the company's expanding small and medium business (SMB) customer base-4,200 net new customers added in Q3 2025-and strategic partnerships, such as its collaboration with Regions Bank and Adyen to enhance digital financial solutions according to financial reports. These moves position BILL as a key player in the automation and embedded finance trends, which are expected to deepen its relationships with SMBs and drive long-term revenue growth.

Contrasting Short-Term Challenges with Long-Term Potential

While 2026 projections include projected losses of $0.63 per share, the company's long-term outlook remains robust. Analysts forecast $2.1 billion in revenue and $94.8 million in earnings by 2028 according to financial projections, supported by its focus on AI integration and financial operations platform enhancements as discussed in earnings calls. Totem Point's investment strategy, which prioritizes early-stage technological trends and uncorrelated returns, aligns with this long-term vision according to institutional filings. Moreover, investor pressure for stronger governance-evidenced by recent leadership changes-could improve capital allocation efficiency and reinforce confidence in management's execution as reported.

Risks and Considerations

Critics argue that macroeconomic headwinds and competition from incumbents like Intuit could hinder growth. Additionally, the company's 9.8% 2026 revenue growth projection lags its five-year average of 38% according to earnings data. However, these risks appear priced into the stock, and the recent 17.2% rebound over the past month suggests a shift in market sentiment according to market analysis. For value investors, the key question is whether the company's strategic initiatives and undervaluation justify a long-term bet on its ability to navigate near-term challenges.

Conclusion: A Discounted SaaS Growth Story

BILL's sharp decline has created an opportunity to assess whether the market is overcorrecting to macroeconomic and sector-specific risks. With strong core revenue growth, a compelling valuation, and strategic momentum in embedded finance and AI, the stock appears undervalued relative to its long-term potential. Totem Point's investment serves as a vote of confidence in the company's fundamentals, even as short-term bearishness persists. For investors willing to look beyond near-term volatility, BILL represents a discounted SaaS growth story with the potential to deliver outsized returns over the next five years.