It is pretty evident and clear that many of the well-known and flourishing tech stocks have faced quite a bit of backlash in the previous months. These also include many tech stocks that have done great in business and have had a fantastic business momentum throughout but have recently reported a drop in stock prices; amongst them are Lemonade and MercadoLibre.
These two stocks have experienced a decrease of up to 48% and 23%, respectively, according to the 52-week history.
Are these stocks worth buying? What about them makes them intriguing and worthwhile? Here is what you must know about buying stocks on discount.
Lemonade Is A Firm That Is Stepping Into New High Growth Areas
At first, it seemed that Lemonade is doing well in its niche, certain segments increased by 87% on a yearly basis, and another factor, earned premium, also increased up to 92%. In addition, the average customer was spending 20% more on services , which increased the overall profit of the company.
The insurance stock has plunged increasingly at 25% after releasing the results. The reason attributed to the 25% plunge is the pressure on growth stocks and the lack of Lemonade guidance.
Lemonade is keenly looking for an alternative approach because it has entered the most prominent insurance market: life insurance. In addition, the insurance company, Lemonade, is rolling out new products. As such, one must watch to see progress over the next few quarters.
Apart from other insurance products, life insurance has always been complicated. One must go through many aspects like a salesperson, submit medical reports, and many more details. The firm is seeking to simplify it and offer convenience. As such, if Lemonade keeps its momentum going on, it can achieve its high growth period soon.
MercadoLibre's Business is Reaching New Heights
MercadoLibre has been a well-known name in the e-commerce marketplace and payment processing service in Latin America. In terms of growth, the turnover has been exceptional throughout the year. The merchandise volume reached up to 110% over a year in the fourth quarter and witnessed a value of $26 billion. The company sold over 230 million products.
Mercado Pago made around $15.9 billion in payments, which accounted for a 134% year-to-year increase together with a 150% increase in off-platform charges.
Around 4% of Mercado's merchandise volume is Amazon. However, the $64 billion volume is not even close to the $1 trillion payment processing of PayPal.
The Long Haul
It is essential to understand the business and the opportunity to capture value over time. That is how one can analyze if a stock is on discount or correctly valued.
