Owhile the market started the year punishing many growth stocks, things now seem to be moving in a more positive direction. Volatility is the entry price, although that doesn’t make a sell easier to bear in the moment.
Nonetheless, investors can view downturns as an opportunity to buy stocks of companies that are likely to perform well over the long term. Here are two top tech stocks that fit the bill: Metaplatforms (NASDAQ:FB) and To block (NYSE:SQ).
Facebook’s parent company, Meta Platforms, has recently encountered its fair share of headwinds. The company handles privacy changes for Applesmartphone operating systems that affected advertisers’ ability to reach their target audiences. Meta Platforms still generates the bulk of its revenue from ads, so it’s no surprise that this development has scared off some investors.
Yet, despite recent misfires, the online advertising industry is going nowhere. In fact, it is set to grow in the coming years and companies like Meta are well positioned to benefit.
The number of users on Meta’s family of websites and apps (including Facebook, Messenger, Instagram and WhatsApp) is impressive. At the end of 2021, Meta had 3.59 billion monthly active users across all of its apps, representing a 9% year-over-year increase. In 2021, the company posted revenue of $117.9 billion and net income of $39.4 billion, representing year-over-year increases of 37% and 35%, respectively. %. In the same year, Meta generated $38.4 billion in free cash flow, 67% more than in 2020.
Meta Platforms can afford to invest in other opportunities with the cash flow it generates. The company has invested money in its metaverse ambitions. These measures could bring serious benefits if, as some have suggested, the metaverse offers a $1 trillion annual revenue opportunity once it’s up and running.
Meanwhile, Meta Platforms is always looking for new ways to monetize Instagram. The company announced Instagram subscriptions in January, a feature that allows creators on the platform to set monthly prices for access to their content. If this feature becomes permanent, Meta Platforms will pocket a percentage of creators’ subscription revenue, although it is not yet doing so.
With all of these potential growth avenues, not to mention its huge network of users, Meta will continue to increase revenue and profits even if growth rates slow in the short term due to competitor roadblocks. Expect Meta to rebound from its current stock market issues and return to providing market-beating returns over the long term.
Block, formerly known as Square, has changed its name to reflect expansion beyond its original business model. Block’s Square segment offers point-of-sale (POS) hardware to businesses of all sizes.
Beyond Square, Block has successfully built an ecosystem of brands through which it offers services such as billing, marketing, cash flow management, and more. Cash App, Block’s peer-to-peer payment application, targets underbanked communities by offering debit cards (Cash Card), stock and cryptocurrency investments, direct deposits and banking services. preparation of statements.
Block ecosystems have been immensely successful. In 2021, the company reported total revenue of $17.7 billion, about 86% more than the prior fiscal year. Block’s total gross profit of $4.42 billion jumped 62% year-over-year. The Cash App ecosystem reported gross profit of $2.07 billion, a 69% year-over-year increase. Square, on the other hand, generated $2.32 billion in gross profit, up 54% from the prior year. Block’s adjusted earnings per share for the year were $1.71, more than double the prior year.
As some investors worry about Block CEO Jack Dorsey’s focus on Bitcoin (CRYPTO:BTC), the company’s bright prospects go beyond cryptocurrency.
Block sees a lot of room to grow with Square and Cash App. The company reports that only around 30% of Cash App users have obtained a Cash Card; increasing this number will drive more spend on the platform and generate higher revenue per user.
Block’s January acquisition of Buy It Now, Pay Later in an all-stock deal valued at $29 billion further enhances the company’s growth track. BNPL companies allow customers to purchase items and arrange installment payments, often without credit. This fits perfectly with Block’s seller ecosystem. According to some estimates, the BNPL market will grow at a compound annual growth rate of 45.7% until 2030. This is good news for Block and its shareholders, as the company will undoubtedly be one of the beneficiaries. .
Given the health of Block’s business and the promising opportunities ahead, it looks like this company is here to stay.
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Randi Zuckerberg, former director of market development and spokesperson for Facebook and sister of Meta Platforms CEO Mark Zuckerberg, is a board member of The Motley Fool. Prosper Junior Bakiny owns Block, Inc. and Meta Platforms, Inc. The Motley Fool owns and recommends Apple, Bitcoin, Block, Inc. and Meta Platforms, Inc. The Motley Fool recommends the following: Long March 2023 Calls for $120 on Apple and short calls of $130 in March 2023 on Apple. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.