Two Growth Stocks Down 20%: Time to Buy?

The year 2022 was challenging for growth stocks, with many experiencing significant declines. Two notable examples are Uber (UBER 1.23%) and Meta Platforms (META -0.59%), both of which have fallen by approximately 20% from their peak prices. However, these declines present an opportunity for investors to consider these undervalued growth stocks.

Uber, the largest ride-sharing company outside of China, has seen its share price decline due to a combination of factors, including supply chain constraints, increased competition, and regulatory pressures. However, the company's network effect, which is strengthened by its growing customer base and the number of people driving for Uber, remains a significant advantage. Additionally, Uber's subscription offering, Uber One, has more than 10 million members, further solidifying its network effect. The company expects gross bookings to reach at least $165 billion by 2024, which could lead to an increase in enterprise value. As Uber continues to expand its gross margin and improve bottom-line profits, investors may see a rebound in its stock price.

Meta Platforms, the largest social media company in the world, has faced challenges such as changes in Apple's iOS data-sharing policies and an uncertain economic environment, leading to reduced ad spending. Despite these hurdles, Meta's strong user base, with almost 3 billion people using at least one of its apps daily, remains a significant competitive advantage. As Meta moves past these hurdles, it should resume strong revenue growth and expanding operating margins, with an enterprise value/EBITDA multiple of around 13x. This suggests that Meta's stock price may rebound in the future.



Investors should consider these undervalued growth stocks, as their fundamentals remain strong, and their competitive advantages are still intact. While there are risks associated with investing in growth stocks, the potential for capital appreciation makes them attractive for long-term investors. As always, it is essential to conduct thorough research and consider your risk tolerance before making any investment decisions.

In conclusion, the 20% decline in Uber and Meta Platforms' stock prices presents an opportunity for investors to consider these undervalued growth stocks. Their strong fundamentals and competitive advantages suggest that they may rebound in the future, making them attractive for long-term investors. However, it is crucial to monitor their progress and reassess their potential catalysts as market conditions and company-specific factors evolve.