To The Moon

By Will Healy, Danny Vena, and Brian Withers KEY POINTS The market doesn't like that this e-commerce specialist is spending billions to enhance its platform, handing patient investors an opportunity. A common misconception makes this digital advertiser a bargain. Investors can own this emerging banking and fintech enterprise at a considerable discount thanks to falling stock prices. These stocks hold the potential to disrupt industries and earn outsize returns. Perhaps no type of stock has suffered more thangrowth tech stocks. The Ark Innovation ETF, which invests most of its assets in this sector, has dropped by over two-thirds from its 2021 high, and a few individual stocks have fallen by more than 90%. Unfortunately, such conditions make investing painful for even the most seasoned investors, and others may want to exit the market completely amid such disappointments. However, the market has historically recovered from downturns worse than this current one. Moreover, attractive price points on many growth stocks await investors who can keep their faith in the market amid the pain. Given their massively discounted valuations, growth-oriented investors may want to considerShopify($Shopify(SHOP)$ ),Roku($Roku Inc(ROKU)$ ), andSoFi Technologies($SoFi Technologies Inc.(SOFI)$ ). Shopify: Making commerce better for everyone Brian Withers(Shopify):The average consumer hasn't heard of Shopify, but its platform enabled 597 million shoppers to buy $175 billion in goods online in 2021. Millions of merchants large and small use its software and services to manage all aspects of their online business, from running websites to warehousing their products and shipping to end customers. The stock has sold off more than 75% since mid-November, but I think the market is underestimating the long-term potential of this gem. Let's take a look at some recent results. Metrics Q1 2020 Q1 2021 Q1 2022 Gross merchandise value (GMV) $17.4 billion $37.3 billion $43.2 billion Change (YOY) 46% 114% 57% Revenue $470 million $987 million $1.2 billion Change (YOY) 47% 110% 22% The table above gives investors a good picture of what happened to the company's growth during the pandemic. The first quarter of 2020 was the beginning of the pandemic before the company saw an incredible boost in sales as people were cooped up at home. As in-store retailers are once again open, it's not surprising growth has slowed. But comparing the revenue and gross merchandise value over the two-year period, it's astounding. Bears would say the company is spending more and the operating income in its most recent quarter turned negative. With growth slowing, the market is looking for companies to turn profits. But, since the beginning, leadership hasn't been focused on the short term. In his 2015 letter to shareholders, co-founder and CEO Tobi Lütke said: "Shopify has been about empowering merchants since it was founded, and we have always prioritized long-term value over short-term revenue opportunities. We don't see this changing." This idea still holds true today as the company is making significant investments in simplifying fulfillment for its merchants. TheShopify fulfillment networkgives entrepreneurs and small businesses access to state-of-the-art fulfillment capabilities including a fleet of robots by way of its purchase of 6 River Systems in 2019. Recently, it's taken another step to simplify fulfillment by announcing a$2.1 billion acquisition of Deliverr, which will provide merchants with end-to-end logistics services. These investments will drive additional expenses in the short term, but create incredible value for customers over the long term. I've been a shareholder for more than five years and this e-commerce platform is one of a small handful of my"never sell" stocks. Even though the bears may be scared off with additional spending, the balance sheet is still incredibly strong, boosted by $7.25 billion in cash and cash equivalents. It can afford to run a negative operating margin for years as it bolsters its platform for customers. With the stock down considerably, it's a great opportunity for patient investors to add some shares of this e-commerce specialist on a mission to "make commerce better for everyone." Think you know Roku? Think again. Danny Vena(Roku):Streaming video has gotten a bad rap lately, giving investors a big dose of uncertainty. Content spending has gone through the roof and competition has ratcheted up to levels few could have imagined just a few years ago. As a result, any company associated with streaming is being viewed as suspect. That suspicion has resulted in a compelling opportunity for Roku investors. While the streaming pioneer has dabbled in originals, the amount of programming has been small by Hollywood standards, so Roku isn't at risk of getting caught up in the spiraling content budgets that plague many streaming video providers. Additionally, Roku makes the bulk of its revenue from the digital advertising shown on its platform. Marketers have been loath to pass it by, as the company boasts more than 61 million active accounts. On the other hand, Roku offers more than 10,000 streaming channels, with popular and niche content for virtually any viewer. This results in a sticky and growing ecosystem that has staying power. Some investors mistakenly believe that Roku is beholden to the set-top boxes it has long sold at or near cost, but its namesake devices only represent a small part of the equation. The company developed an operating system -- The Roku OS -- that it licenses to a large and growing number of international connected television companies. This results in a rare win-win because the smart-TV manufacturers don't have to reinvent the wheel and Roku's account base grows. There's also the popular misconception that Roku will suffer when subscribers abandon paid streaming services in favor of cheaper, ad-supported options. However, the shift actually benefits Roku, as it will boost the company's advertising revenue. Additionally, with industry leaders includingNetflixandWaltDisney's Disney+ reportedly adding lower-cost tiers supported by advertising, Roku is uniquely positioned to benefit from this trend, by increasing the marketing spend on its platform. Given the large and growing opportunity and its industry-leading and channel-agnostic platform, Roku stands to profit from these trends for years to come. SoFi: A rare combination of fintech and traditional banking under one umbrella. Will Healy(SoFi Technologies):SoFi's stock history makes it easy to dismiss. It went public when a special-purpose acquisition company (SPAC) bought it. Many SPACs have performed poorly soon after launching, and SoFi is no exception. It has lost more than half of its value since its debut on June 1 after its merger with Social Capital Hedosophia Holdings V took it public. However, investors who think that poor start is a harbinger of a challenging future may want to look again. The company continues to build competitive advantages as it offers multiple lending, banking, brokerage, and financial planning services. SoFi added one of these advantages when it acquired Galileo Financial Technologies. It also expanded its offerings earlier this year by purchasing Golden Pacific Bank. That move gave this company a bank charter. AlthoughBlockcombines fintech and traditional banking for business customers, SoFi is one of the few to offer this combination of banking and fintech capabilities to individuals. Still, even with these attributes, it faces significant challenges. SoFi began as a student lender, and this loan category has suffered amid moratoriums on student loan repayment. Moreover, it inflicted damage upon itself, at least temporarily, with the leak of its Q1 earnings report. Lower valuation amid massive customer growth and an expanding ecosystem has arguably made SoFi one of thetop growth stocks to buy.