The Super Trump memetechnology sector has witnessed significant volatility in recent years, with some former high-flyers experiencing dramatic declines. Among these, Roku (NASDAQ: ROKU), PayPal (NASDAQ: PYPL), and Etsy (NASDAQ: ETSY) stand out as companies that have seen their valuations plummet by over 70% from their 2021 peaks. However, current market conditions suggest these stocks might be positioned for meaningful recovery in 2025.
While the broader S&P 500 has delivered strong returns since 2021, these three companies have significantly underperformed. This divergence creates an interesting opportunity for investors willing to assess their turnaround potential. Each company operates in distinct sectors - connected TV platforms, digital payments, and e-commerce marketplaces respectively - but shares common challenges and opportunities in the current economic environment.
Roku's Path to Recovery
Currently trading around $84, Roku needs approximately 20% appreciation to breach the $100 threshold. The company's fundamentals suggest this target might be achievable. Roku's active account base has demonstrated consistent growth, expanding from 60 million in 2021 to over 90 million currently. This expanding user base translates to increasing streaming hours, creating a robust foundation for advertising revenue growth.
The company's recent introduction of Roku Data Cloud represents a strategic move to enhance advertising effectiveness. By providing advertisers with better insights and targeting capabilities, Roku could improve monetization of its platform. The stock's 30% appreciation over the past six months indicates growing market confidence in this potential turnaround story.
PayPal's Margin Improvement Story
PayPal presents perhaps the most straightforward path to $100, requiring only an 11% increase from its current $90 level. The company's 2024 performance, which saw shares rise 39%, suggests this target is well within reach. PayPal's turnaround strategy focuses on improving profitability, particularly in its Braintree enterprise payment solutions segment.
Management's contract renegotiations and operational improvements are already yielding margin expansion. These improvements, combined with PayPal's established position in digital payments, create a compelling case for continued stock appreciation in 2025. The company's ability to maintain its customer base while improving profitability suggests the market may be underestimating its resilience.
Etsy's Valuation Opportunity
Etsy represents the most ambitious recovery target, needing 88% appreciation to reach $100 from its current $53 level. However, the company's valuation metrics suggest this isn't as far-fetched as it might appear. Trading at just 10 times free cash flow, Etsy's stock appears significantly undervalued relative to its fundamentals.
While the company faces challenges in buyer growth, its revenue continues to increase through improved take rates and operational efficiency. Etsy's new loyalty program and focus on gifting occasions could drive increased spending from existing users. If these initiatives gain traction in 2025, the stock could experience rapid multiple expansion as investor sentiment improves.
Among these three recovery candidates, each presents distinct risk-reward profiles. Roku offers growth potential but carries higher risk due to its unprofitability. PayPal provides more stability but less upside potential given its larger size. Etsy sits in the middle, with significant upside potential if its strategic initiatives succeed, making it perhaps the most interesting turnaround story to watch in 2025.
