High-growth technology stocks, which sold off sharply at one point earlier this year, are experiencing a reawakening as of late. Investors are now rotating back into the sector at the expense of economy-linked stocks, such as Industrials, Materials, and Financials.
That development has seen the NASDAQ Composite Index climb to new all-time highs this week, as the tech trade came back into favor.
Given the newly-favorable investor sentiment towards tech, here are three names to consider as fast-growing tech stocks are given another chance.
1. CrowdStrike
- Year-To-Date Performance: +7.8%
- Market Cap: $52.7 Billion
CrowdStrike Holdings (NASDAQ:CRWD), whose technology is used to detect and prevent security breaches, has seen its shares endure some turbulence lately.
After rallying to a record high of $250.42 on Feb. 16, CRWD stock tumbled rapidly to a low of $168.67 on Mar. 5, amid a general selloff in high-growth tech names.
CrowdStrike shares have since clawed back some losses, closing at $228.34 last night, but they still stand roughly 9% below their recent all-time peak.
The Sunnyvale, California-based cybersecurity specialist, whose stock is up nearly 8% year-to-date and 145% in the last 12 months, has a valuation of $52.7 billion.
CrowdStrike reported a massive beat on earnings and revenue when it released fiscal first quarter financial results on June 3, benefitting from increased enterprise cybersecurity spending.
The company’s financial results have now surpassed consensus estimates in each quarter since going public in June 2019.
Adjusted earnings per share totaled $0.10, up an astonishing 400% from adjusted EPS of $0.02 a year ago. Revenue, meanwhile, jumped 70% year-over-year to a record $302.8 million, easily beating expectations for sales of $291.5 million.
Even more impressive, CrowdStrike said annual recurring revenue (ARR)—an important sales metric—surged 74% from the year-ago period to reach an all-time high of $1.19 billion.
The cybersecurity firm said it added 1,524 net new subscription customers in the quarter, reflecting soaring demand for its cloud-based Falcon cybersecurity platform. It now has a total of 11,420 customers, up 82% from the same period a year earlier.
Additionally, CrowdStrike’s management sounded upbeat regarding the outlook for the months ahead, forecasting revenue growth of nearly 62% in the second quarter to $321.3 million.
“We believe the robust demand environment driven by secular trends, such as digital and security transformation, cloud adoption and a heightened threat environment, provides a runway for long-term sustainable growth,” said George Kurtz, CrowdStrike co-founder and chief executive, in a statement.
2. Roku
- Year-To-Date Performance: +2.4%
- Market Cap: $45 Billion
After scoring a remarkable gain of almost 150% in 2020, shares of Roku (NASDAQ:ROKU) shot up another 46% at one point early in 2021, before a sell-off in tech companies, which have rallied throughout the COVID pandemic, took some wind out of the streaming video platform’s sails.
ROKU stock ended at $339.88 on Tuesday, roughly 30% below its all-time high of $486.50 touched on Feb. 16. At current levels, the San Jose, California-based streaming video pioneer—which is still up 216% in the past year—has a market cap of around $45 billion.
Roku reported a surprise profit when it released first quarter financial results on May 6, along with better-than-expected revenue, which soared 79% from the same period a year earlier.
The streaming video platform has now either beaten or matched Wall Street expectations for 15 consecutive quarters, dating back to Q3 2017, thanks to its rapid user growth, which has translated into higher advertising revenue.
Roku added 2.4 million active accounts in the first quarter, bringing its total to 53.6 million. Those accounts spent a remarkable 18.3 billion hours streaming through Roku's hub, up from 17.0 billion in the previous quarter.
To add to those encouraging numbers, Roku’s average revenue per user (ARPU)—a key sales metric—clocked in with a double-digit percentage gain, rising 32% year-over-year to a record high of $32.14.
“Advertisers continued to follow audiences and move budgets into TV streaming, with Roku’s monetized video ad impressions more than doubling year-over-year,” the company said in the earnings release.
Looking ahead, Roku’s management provided a positive outlook for the current quarter, lifting its profit and sales guidance due to robust growth in its core ad-revenue business.
Despite recent volatility, we expect ROKU stock to extend its run higher in the weeks and months ahead as the current operating environment has created a perfect backdrop for the streaming media platform to thrive.
3. Pinterest
- Year-To-Date Performance: +7%
- Market Cap: $44.9 Billion
Pinterest (NYSE:PINS) shares—which were one of the big winners of 2020—have seen their ascent slow this year, climbing just 7% year-to-date as investor sentiment cooled on high-growth tech shares which pushed upwards throughout the COVID-19 pandemic.
PINS stock—which is still up 233% in the last 12 months—ended at $70.55 last night, giving the San Francisco, California-based image-sharing social media platform a market cap of around $44.9 billion.
At current levels, it remains more than 21% below its recent record of $89.50 scaled on Feb. 16.
Pinterest reported earnings and revenue which easily beat estimates when it released first quarter financial results in late April, driven by strong advertising spending and further international expansion.
It has now topped Wall Street’s profit and sales expectations for four consecutive quarters.
The social media company reported adjusted earnings of $0.11 per share, surpassing consensus estimates of $0.06 a share. Revenue of $485.2 million was up 78% year-over-year, blowing past expectations for sales of $471.7 million.
Pinterest said global monthly active users (MAUs) jumped 30% from a year ago to 478 million, slightly missing estimates of 479.4 million. U.S. monthly active users totaled 98 million, up 9% year-over-year, while international MAUs increased 37% to 380 million.
Looking ahead, Pinterest's guidance for the second quarter made clear that the social media network does not expect any slowdown in the coming months, with revenue forecast to grow by a whopping 105% from a year ago to $558 million.
Additionally, Pinterest said it expects global MAUs to grow by a percentage in the mid-teens, while U.S. user growth is forecast to be flat on a year-over-year percentage basis.
"As pandemic lockdowns were eased in some parts of the world during mid-March, we began to see signs of less engagement and user growth on Pinterest, and we assume this means people are spending more time offline," Chief Executive Ben Silbermann said on the company’s earnings call. "While it's impossible to say how people act as we enter the summer months, we anticipate this trend will continue," he added.
Despite worries over a slowdown in user growth, Pinterest remains well-positioned to remain one of the standout performers in the booming social media space, driven by robust advertiser demand as well as positive returns from its ongoing international expansion.