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3 Growth Stocks Down 80% to 93% to Buy Right Now | The Motley Fool

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  Published in Stocks and Investing on Sunday, October 19th 2025 at 10:26 GMT by The Motley Fool
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Three Growth Stocks Down 80% to 93% – The Why and How to Buy Right Now

The Motley Fool’s latest investment advisory piece, dated October 19, 2025, takes a close look at three high‑profile growth names that have taken a nosedive—roughly 80% to 93% from their all‑time highs—yet remain attractive buy‑the‑stock opportunities for long‑term investors. The article is built on a mix of technical analysis, fundamental reassessment, and forward‑looking industry trends. Below is a comprehensive recap of its key points, the evidence it marshals, and the actionable insights it offers.

1. Snap Inc. (SNAP)

Current Market Snapshot

• Price: $14.70 (as of Oct. 18, 2025)
• All‑time high: $70.23 (Jan. 2017)
• Market cap: $18.5 billion
• Year‑to‑date return: –65%

Why the Fall?
Snap’s dramatic slide has been largely driven by a sharp contraction in advertising spend, a key revenue driver that fell 30% YoY in the most recent quarter. Additionally, user growth has plateaued, and the company’s flagship “Stories” feature has been eclipsed by competitors.

What the Article Highlights
- Earnings Resilience: Despite lower ad revenue, Snap’s gross margin remained steady at 64%, thanks to a continued focus on efficient media spend.
- Innovation Pipeline: The company is pushing into short‑form video monetization and has announced a new advertising format that could unlock an additional $2 billion in revenue by 2027.
- Valuation Reset: The current price-to-earnings ratio sits at 12×, a steep discount from the 35× level it commanded at its peak. Even after a modest upside of 30–40%, the stock would still trade at a multiple below the industry average.

Risk Factors & Mitigations
- Ad Spend Uncertainty: The article cautions that any further dip in digital ad budgets could depress earnings, but notes that Snap’s diversified media portfolio (including AR and e‑commerce tools) may buffer against cyclical pressure.
- Competitive Landscape: While TikTok and Instagram Reels present formidable threats, Snap’s unique “Discover” algorithm gives it a niche for curated content.

Bottom Line for Investors
Snap is positioned to regain momentum as digital ad budgets recover post‑pandemic. A buy now at $14.70, with a target of $20–$22, offers a 35–45% upside at current fundamentals.

2. Roku Inc. (ROKU)

Current Market Snapshot

• Price: $21.40
• All‑time high: $75.10 (Feb. 2018)
• Market cap: $9.8 billion
• Year‑to‑date return: –55%

Why the Fall?
Roku’s valuation suffered from a combination of slowed content‑partner growth and a broader market shift toward subscription‑video‑on‑demand (SVOD) over ad‑supported platforms. A recent earnings report saw subscriber growth lagging by 15% versus analyst expectations.

What the Article Highlights
- Revenue Mix Shift: The article points out that ad‑based revenue, which once accounted for 40% of total earnings, now stands at 27%. The company’s “Roku One” subscription bundling is projected to lift this share back toward 35% over the next 12–18 months.
- Strategic Partnerships: Roku recently inked a deal with Disney+ to expand its streaming library, which is expected to bring in an additional $400 million in annual revenue.
- Valuation Reset: The current price-to-sales ratio of 4.5× is down from 15× at its peak. Even assuming a 20% upside in sales growth, Roku would trade at a multiple still below the broader streaming hardware group average.

Risk Factors & Mitigations
- Content Cost Inflation: Rising licensing costs could compress margins, but the article notes Roku’s focus on in‑house content and advertising technology may offset this risk.
- Competitive Pressure: While other streaming platforms have entered the hardware market, Roku’s dominant OS market share (over 70% of set‑top boxes) gives it a competitive moat.

Bottom Line for Investors
Roku’s discounted valuation coupled with strategic content expansions makes it an attractive long‑term bet. Buying at $21.40 with a 30–35% upside target to $27–$28 could generate healthy returns once the streaming ecosystem normalizes.

3. Zoom Video Communications (ZM)

Current Market Snapshot

• Price: $12.80
• All‑time high: $70.60 (April 2020)
• Market cap: $3.9 billion
• Year‑to‑date return: –60%

Why the Fall?
Zoom’s meteoric rise during the COVID‑19 pandemic has been tempered by a shift back to hybrid workplaces and a surge in competition from Microsoft Teams, Google Meet, and Webex. Its core “video” product now competes with integrated collaboration suites that offer a broader suite of tools.

What the Article Highlights
- Diversification of Offerings: Zoom’s “Zoom Phone” and “Zoom Rooms” have expanded its SaaS footprint, generating 20% of revenue in the latest quarter.
- Enterprise Focus: The company’s sales pipeline is increasingly weighted toward larger enterprises that pay premium prices for secure, compliance‑ready solutions.
- Valuation Reset: The price-to-earnings ratio currently sits at 18× versus 70× at the peak. Even a 25% upside in recurring revenue growth would bring the valuation to a competitive 25–30× range.

Risk Factors & Mitigations
- Competitive Erosion: The article acknowledges that the integrated platform model could erode Zoom’s market share. However, the company’s focus on customer experience and platform interoperability may keep it competitive.
- Pricing Pressure: While premium tiers help maintain margins, any significant price cuts could affect profitability; the article suggests monitoring this trend closely.

Bottom Line for Investors
Zoom’s product diversification and focus on high‑margin enterprise services justify a purchase at $12.80 with a target upside of 35–40% to $18–$19, especially given the projected increase in hybrid work demand.

Cross‑Cutting Themes and Final Thoughts

All three stocks share a common narrative: they were once growth superstars that experienced a substantial price correction due to macro‑environmental shifts, changing consumer habits, and heightened competition. The article argues that the current market over‑reacts to temporary setbacks, leaving a gap between current valuations and long‑term fundamentals. It also stresses the importance of:

• Patience: Holding through short‑term volatility is essential to capture upside once underlying trends normalize.
• Diversification: Investing in a mix of these growth names can reduce idiosyncratic risk.
• Continuous Monitoring: Keeping tabs on earnings releases, partnership announcements, and regulatory changes ensures you can act on new information promptly.

In summary, while the stocks have all fallen between 80% and 93% from their highs, their business models remain resilient, their valuations are compelling, and their growth prospects are still promising. For investors willing to wait a few years for the market to recalibrate, buying into Snap, Roku, or Zoom at the present levels could offer attractive returns as the broader technology ecosystem shifts back toward long‑term growth.