While we’ve all heard the phrase bad news is good news in the capital markets, for certain tech stocks rising from adversity, the adage may yield considerable shareholder profits. As a caveat, one should realize that companies that print red ink often do so for a reason. Usually, it’s not a good one. Still, high-return troubled tech stocks continue to delight fortunate speculators.
One reason why tech stocks turning negative into positive remains a legitimate phenomenon for some organizations comes down to a simple mathematical reality: the market never generates perfectly linear trajectories. If it does, it doesn’t last for long. It’s like baseball – slumping players often hit a home run because they’re due.
Another reason to consider tech stocks with high recovery potential is that they may offer brilliant discounts for those willing to see through the ugliness and look toward the potential. Typically, tech plays operate as growth-oriented endeavors. When investors get cold feet, the volatility could be severe because such enterprises lack alternative avenues, such as dividends. At the same time, when investors believe again, the upside can be equally intense. With that, below are resilient tech stocks to consider.
Tech Stocks Rising from Adversity: Twilio (TWLO)
A specialist in programmable communication tools, Twilio (NYSE:TWLO) essentially makes several of our favorite apps operate smoothly. From ordering ride-sharing services to having food delivered to our doorstep, Twilio’s tech wizardry undergirds connectivity platforms with real substance. TWLO also makes a case for tech stocks rising from adversity.
Unfortunately, the company suffered heavily under the weight of the Federal Reserve’s hawkish monetary policy. For example, the loss of sentiment in the cryptocurrency space resulted in declined interest in Twilio’s two-factor authentication (2FA) protocol. These and many other headwinds forced multiple rounds of steep layoffs. Still, it could be one of the high-return troubled tech stocks.
As InvestorPlace Assistant News Writer Shrey Dua mentioned, Twilio benefits from an expanded partnership with Amazon (NASDAQ:AMZN). Specifically, the communications specialist will enhance Amazon Web Services (AWS) predictive AI proficiency.
To be fair, Twilio’s financials could use some work, particularly in sparking credibility toward a path to profits. Still, management might be making the right moves, thus warranting consideration for tech stocks turning negative into positive.
PayPal (PYPL)
A popular financial technology (fintech) firm, PayPal (NASDAQ:PYPL) specializes in online payments and business management solutions. From the spring doldrums of 2020 through most of Sept. 2021, PYPL represented a high-flying asset. Fundamentally, government restrictions on non-essential activities and broader social concerns sparked interest in contactless platforms. However, it’s now a candidate for tech stocks rising from adversity.
On a monetary policy level, rising borrowing costs from spiked interest rates didn’t exactly help a growth trade like PayPal. In addition, as fears of the SARS-CoV-2 virus faded, certain fintech platforms facilitating contactless transactions lost relevance. Combined with rising competition, PayPal started distributing pink slips. Earlier this year, management announced it would reduce its workforce by about 7%.
Nevertheless, PYPL might be one of the tech stocks with high recovery potential. In particular, the burgeoning gig economy could help lift PayPal. Indeed, the company benefits from significant brand awareness (read trust). Also, PYPL carries a moderate buy consensus view with a $91.11 price target, implying 23% upside. Thus, it’s one of the resilient tech stocks in experts’ eyes.
BuzzFeed (BZFD)
To be 100% clear, media firm BuzzFeed (NASDAQ:BZFD) represents one of the riskiest ideas you can ever dream up for tech stocks rising from adversity. Some might say the company deserves its troubles. Earlier this year, the platform sparked controversy when it came to light that BuzzFeed was quietly publishing entire articles generated by artificial intelligence. However, this decision might not have been the best idea.
Shortly thereafter, management announced a significant workforce reduction to the tune of 15% of its staff. Ominously, the company shut down BuzzFeed News, its straight news and investigative reporting unit. Sadly, digital ad dollar declines and a terrible market for journalism sparked the pink slips. It’s a common theme within the content-generation space, with several sector players feeling the heat.
Nevertheless, having made the cuts, it’s also possible that management can focus on what works. In other words, cut the journalism and go for titillating editorials. I’m not even sure the modern audience knows the difference.
Granted, this is a tough case for high-return troubled tech stocks. However, it’s interesting that in the trailing month, BZFD gained over 29% of equity value. Who knows – maybe there’s a chance?
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
