Key Points
Figma, The Trade Desk, and Duolingo have fallen by at least 70% since peaking last year.
Figma saw revenue growth accelerate in its latest quarter.
The Trade Desk and Duolingo are now trading for less than 14 times forward earnings.
Wall Street has been volatile lately, but some stocks have been hit much harder than others. A quarter of the market's publicly traded companies have shed more than half of their value. Just a tenth of the stocks have plummeted at least 70%. I want to highlight some of those diamonds in the rough.
Figma(NYSE: FIG), The Trade Desk(NASDAQ: TTD), and Duolingo(NASDAQ: DUOL) are trading 79%, 70%, and 82% below their 52-week highs, respectively. They may have been expensive growth stocks at their peaks, but is the pessimism overdone? All three stocks are still expected to deliver double-digit revenue growth in 2026.
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1. Figma
It's not easy being a provider of cloud-based solutions these days. The rapid evolution of artificial intelligence (AI) -- particularly the ability to code customized software with just some rudimentary prompts -- is seen by some as a death sentence for business models that rely on enterprises paying up for help.
Figma stock was a market darling when it went public at $33 last year, trading as high as $143 over the summer. The platform helps with the design of websites, apps, and other digital formats. Figma has given back all those gains, and now it's a broken IPO, all in its topsy-turvy rookie season.
Growth has slowed at Figma. Year-over-year gains on the top line rose 46%, 41%, and 38% through the first three quarters of last year, respectively. After investors were braced for continued deceleration by a projection of 35% growth for the fourth quarter, last month's report came as a bullish surprise.
Revenue gains picked up the pace, climbing 40% for the final three months of the year. Figma's net dollar retention rate -- what returning customers are spending over the past year compared to the previous 12 months -- has risen to 136%. This is its strongest showing on that front in two years. It wasn't a perfect report. Margins continue to be under pressure. However, this was a strong counterattack to the bearish narrative about software-as-a-service (SaaS) stocks.
There will be corporate casualties in the AI revolution. A lot of those hits will happen in platforms that can be automated, like website design and app updates. The future may be more competitive and with less wiggle room on pricing. As long as Figma's net dollar retention rate remains strong, the sell-off seems more like an opportunity.
2. The Trade Desk
The Trade Desk was a rock star through its first eight years of public trading. Then it proved mortal. It's now been 13 months since the programmatic advertising leader stunned the market with its first guidance miss as a public company, having been flawless for the 33 previous quarters. Unfortunately, it wasn't a one-time blip.
The 14% revenue growth it posted in its latest quarter is its weakest report outside of the pandemic-saddled second quarter of 2020. Making matters worse, The Trade Desk is currently on its third CFO over the past year as it searches for a fourth. It's not a good look when the critical CFO post is a revolving door.
The good news is that an even more important executive is backing up the truck. CEO Jeff Greene bought $150 million worth of The Trade Desk stock last week, his first major purchase since the pullback started a year ago.
Analysts see the business deceleration continuing, but at a moderate pace. They are targeting 13% top-line growth this year and a 12% rise in 2027. In the meantime, you can buy a piece of the company for less than 14 times forward earnings, a steep discount to its historical market premium.
3. Duolingo
The hardest-hit of the three stocks is Duolingo. It has crashed more than 80% from last year's peak. The language-learning app developer has also heard the naysayers argue that it will be replaced by free or nearly free AI tools. The good news is that 77% of its 52.3 million monthly active users are on free, ad-supported accounts.
Duolingo's audience has grown 30% over the past year. App updates and the expansion of its learning categories have made the platform stickier. The challenge may be real, but Duolingo's still growing. The 2026 guidance it offered last month was disappointing, but as with The Trade Desk, you can buy into Duolingo for less than 14 times this year's projected earnings.
The bargains are out there. You just need to be patient as you sift through the ruins of the market's retreat.
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Rick Munarriz has positions in Duolingo and The Trade Desk. The Motley Fool has positions in and recommends Duolingo, Figma, and The Trade Desk. The Motley Fool has a disclosure policy.
