Recently, many of great stocks were crushed as rate hike fears, inflation and Russia’s invasion of Ukraine has sparked a rotation toward the more conservative investments. Cathie Wood’s ETF, Ark Innovation– arguably the top fund of hypergrowth stocks — has decreased almost 40% this year.
However, that sell-off has also produced promising buying opportunities for traders who are able to stomach the short term volatility. Here are three hypergrowth stocks I would buy in this challenging market: Airbnb, Datadog and Cloudflare. Here is a bit more about the three hypergrowth tech stocks you should purchase in 2022.
Airbnb’s revenue fell 30% in 2020 as the coronavirus pandemic caused travel around the globe to grind to a halt. But last year, its revenue skyrocketed 77% as those lockdown measures started to be relaxed. This year, analysts predict its revenue to increase 32% and break the streak of losses it has endured with a full-year of profit.
Airbnb’s business model is naturally protected from high inflation, for two main reasons: Tighter budgets will push guests toward the cheaper accommodations, while those needing extra income will encourage them to rent out their homes.
Datadog’s cloud-based platform observes and monitors an organization’s servers, databases and apps in real time, then aggregates all of that data on its unified dashboards for IT professionals to look over. This streamlined technique makes it a lot easier to spot and fix tech issues.
Datadog’s revenue soared 66% in 2020, then grew around 70% last year as its total number of customers with over $1 million in yearly recurring revenue had more than doubled. It has also kept its dollar-based retention rate over 130% for 18 consecutive quarters. The company’s gross margins are continuing to hold steady and its net losses are dwindling.
Analysts think Datadog’s revenue will increase 49% to $1.5 billion in 2022, and the stock trades at around 30 times that estimate. That is a premium valuation, but it will be easily supported by Datadog’s excellent growth rates.
As the Russian-Ukrainian war escalates, fears of internet disruptions and cyberattacks are increasing. Cloudflare’s platform addresses some of those fears with its content delivery network, which speeds up the delivery of digital media on websites and apps, and cybersecurity tools that protect websites from DDoS attacks.
Cloudflare was already seeing large growth prior to the war. Its revenue increased 50% in 2020 and 52% last year, and analysts believe its revenue will grow 42% to $931 million in 2022 as it ekes out a very small profit. The company has plenty of room to grow as businesses aggressively secure their websites and speed up the delivery of their digital content to visitors.