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2 Growth Stocks Down 38% and 65% to Buy Right Now | The Motley Fool

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  Published in Stocks and Investing on Thursday, October 30th 2025 at 16:49 GMT by The Motley Fool
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Two Growth‑Stock Setbacks: Why 38% and 65% Down Prices Might Signal Buying Opportunities

The world of high‑growth equities is a roller coaster, and the latest headlines from The Motley Fool have two names that have plummeted almost a third or more of their trading value: Roku Inc. and Palantir Technologies Inc. (ticker symbols: ROKU and PLTR). In an August 2025 feature, the paper argues that these steep declines are not just a symptom of temporary market over‑reaction but a window into undervalued, fundamentally sound businesses that are poised to rebound as macro‑economic trends shift and their business models mature.

1. Roku – Down 38% on a “Reset” in Streaming

Current context
Roku’s shares are hovering around $60, down roughly 38% from their all‑time high of $101 in late 2023. This slide comes amid a broader “streaming saturation” narrative that investors have been pursuing: the ad‑supported segment of the market is now competing against a host of new entrants and traditional cable companies that are re‑entering the arena with hybrid bundles.

Why the drop?
Revenue slowdown – Roku’s quarterly revenue growth has decelerated from a 30% YoY pace in 2023 to just 8% in the last quarter. Analysts cite softer ad demand and higher customer churn as the primary drivers.
Valuation re‑assessment – The company’s price‑to‑earnings ratio fell from a lofty 45x in 2023 to around 25x, in line with the broader streaming sector’s shift toward a 20–25x norm.
* Competitive pressure – Amazon’s Fire Stick lineup, Disney’s new ad‑tier on Disney+, and Apple’s new “Apple TV+” bundle have eroded Roku’s share of wallet in the U.S. market.

What the fundamentals say
Despite the slide, the underlying business remains robust. Roku’s operating margin remains around 15%, and its cash conversion cycle is still shorter than its peers. The firm has a sizable free‑cash‑flow reserve and continues to reinvest heavily in content licensing and platform development. A key valuation metric that The Motley Fool highlights is Roku’s trailing 12‑month price‑to‑sales ratio of 6x, comfortably below the sector average of 10x and well below its 2023 high of 12x.

The buying case
The analysis suggests that the 38% drop has left Roku’s shares undervalued relative to both its historical earnings potential and the sector’s current valuation landscape. With a strong balance sheet and a strategy that is actively positioning itself in the “ad‑supported streaming” niche—an area where consumer ad spend is expected to grow by 5–6% annually—Roku is positioned to regain momentum as advertisers return to the platform in a post‑pandemic economy.

2. Palantir – Down 65% in the Wake of “AI” Speculation

Current context
Palantir’s stock is now trading around $60, down a staggering 65% from the $190 peak in mid‑2023. The plunge follows a sharp decline in institutional demand for the data‑analytics platform, coupled with an over‑optimistic narrative that the company was “too close” to the AI boom that has since been tempered by regulatory scrutiny and real‑world execution challenges.

Why the drop?
Lowered revenue forecasts – Palantir’s FY 2025 revenue growth estimate has been cut from 25% to 12%.
Product pipeline concerns – Investors are worried that Palantir’s flagship product, Foundry, has not seen the same level of uptake in the commercial sector as expected.
* Macro‑risk – General market volatility and a tightening of Fed policy have left the company’s high‑valuation multiples under stress.

What the fundamentals say
Despite these concerns, Palantir still reports a healthy gross margin of 70% and an operating margin of 15%. The firm’s cash burn has slowed dramatically, and its balance sheet remains solid with $3.5 billion in cash and equivalents. Crucially, Palantir has diversified its revenue streams beyond the government and intelligence sectors into commercial clients in healthcare, energy, and logistics.

The buying case
The article posits that Palantir’s steep decline is an overreaction to short‑term market sentiment. When viewed through the lens of enterprise‑software valuation, the company’s enterprise‑value/EBITDA multiple sits at roughly 12x, far below the sector average of 18x. With a proven track record of upselling to large enterprise accounts and a strong pipeline of AI‑driven solutions that can address data‑integration challenges across industries, Palantir’s fundamentals suggest that a 65% correction could be setting the stage for a long‑term upside.

3. How to Evaluate a “Buy” on a Downtrend

1. Look at the fundamentals – Revenue growth, margins, cash flow, and balance‑sheet strength should still be solid.
2. Compare valuation multiples – Relative to peers and historical levels, a 20–30% lower P/E or EV/EBITDA can indicate an undervalued position.
3. Consider macro trends – Streaming and AI data analytics are poised for growth; the companies in question are positioned to benefit as these sectors mature.
4. Watch for catalysts – Product launches, key new contracts, or a shift in competitive dynamics can quickly change the narrative.

4. Key Takeaway

Both Roku and Palantir have experienced significant price erosion—38% and 65% respectively—but the article argues that these falls are not necessarily a sign of fundamental decline. Instead, they reflect market over‑reactions to short‑term volatility and shifting investor sentiment. By anchoring the analysis in fundamental metrics and sector trends, The Motley Fool presents a compelling case that both companies could be attractive additions to a growth‑focused portfolio in 2026 and beyond. Investors who are comfortable with higher‑risk, higher‑reward equities might find these two opportunities worth adding to a diversified portfolio.

Source: The Motley Fool, “Two Growth Stocks Down 38% and 65% – Buy Right Now?” (October 30, 2025).