As markets have tumbled over the last week, the list of tech stocks registering large declines has included many names that have limited direct exposure to the coronavirus outbreak -- at least outside of the impact a broader outbreak would have on global economic activity.
Here's a look at a few names that fit this description. Investors should keep in mind that these companies (like most others) are likely to see additional selling pressure if the current selloff continues.
1. Facebook (FB)
Decline from 52-Week High: 12%
With its services blocked in China, Facebook's Chinese exposure is mostly limited to ad sales to Chinese businesses looking to reach overseas consumers, along with some local R&D facilities. Shares sold off in late January after Facebook cautioned that revenue growth (25% in Q4) would be pressured in the near-term by ad targeting headwinds (caused in large part by access to less data about non-Facebook activity), and have recently added to their losses.
Those headwinds could yield choppy trading for Facebook in the near-term even if markets stabilize. But with shares now trading for about 18 times Facebook's 2021 EPS consensus in spite of aggressive spending and the company still possessing a lot of headroom to monetize Instagram and its messaging apps, such near-term headaches feel priced in.
2. Pinterest (PINS)
Decline from 52-Week High: 45%
Pinterest jumped three weeks ago after trouncing Q4 estimates and issuing solid full-year guidance. But shares have more than given back their gains since, and are once more near 2019's $19 IPO price.
Pinterest's $9.9 billion enterprise value (market cap minus net cash) is equal to 6.5 times its 2020 revenue consensus, and 5.1 times its 2021 revenue consensus. Perhaps more importantly, Pinterest is still in the early stages of monetizing its e-commerce-friendly platform, and with the company claiming 335 million monthly active users (MAUs) at the end of 2019, its per-user valuation is well below that of publicly-traded social media peers.
3. Dropbox (DBX)
Decline from 52-Week High: 24%
Though Dropbox flew higher last Friday after beating Q4 estimates, announcing a $600 million stock buyback and forecasting it will produce more than $1 billion in annual free cash flow (FCF) in 2024, it has gradually given back more than half its gains since. As a result, Dropbox now has an enterprise value equal to about 12 times next year's FCF consensus, not to mention just over 7 times its 2024 FCF guidance.
For a company that's still growing its billings at a double-digit clip, and whose investments in a slew of value-added workflow and collaboration tools should help it both grow its subscriber base and get more revenue from many existing subs, that's not a bad deal.
4. Stitch Fix (SFIX)
Decline from 52-Week High: 34%
Though Amazon.com (AMZN) has launched a couple of apparel services for Prime members that encroach on Stitch Fix's turf, Stitch Fix is still registering 20%-plus annual sales growth for its personal styling services, thanks to both shopper growth and greater revenue per user. Much like Dropbox, Roku (ROKU) or Etsy (ETSY) , Stitch Fix's focus on a relatively limited set of offerings has served it well.
Stitch Fix's near-term profits are depressed by marketing investments and the rollout of new services. However, the company does have a 40%-plus gross margin, and its enterprise value is equal to slightly less than 1 times its fiscal 2021 (ends in June 2021) sales consensus.
At such a multiple, Stitch Fix looks reasonably-priced even if growth is pressured a bit by Amazon's service launches. Prospective investors should keep in mind that Stitch Fix's December quarter report arrives on March 9.