3 Growth Stocks Down 70% to Buy Right Now

Three software/media names — Figma, The Trade Desk, and Duolingo — are trading roughly 79%, 70%, and 82% below their 52-week highs after plunges of at least 70%. Figma reported Q4 revenue growth re-accelerating to 40% YoY and a net dollar retention rate of 136% (best in two years) though margins remain pressured. The Trade Desk posted 14% revenue growth in its latest quarter amid a revolving CFO role but CEO Jeff Green bought $150M of stock; analysts forecast ~13% top-line growth and the stock trades at <14x forward earnings. Duolingo’s MAUs rose 30% to 52.3M with 77% on free ad-supported plans, but 2026 guidance disappointed; it also trades at <14x projected earnings.

Analysis

AI-driven commoditization is the immediate structural threat for design and language platforms, but it also creates a bifurcation: vendors that convert generative models into enterprise-grade workflow plugins (billing for outcomes, not seats) will expand gross margins and widen moats, while pure consumer-facing features will be price competed to near-zero. The hardware and cloud layers that enable large-scale model inference are the hidden leverage — sustained enterprise re-platforming toward on-prem or hybrid inference increases demand for GPU/CPU cycles, favoring semiconductor and infrastructure suppliers over pure-software comparables.

Operational and governance signals matter more than growth headlines in this environment. Management stability, deterministic monetization levers (enterprise contracts, seat upgrades, ad yield improvements), and predictable gross-dollar retention trajectories will be the primary catalysts over the next 2–12 quarters; conversely, accelerated substitution by offline or client-side models and renewed ad spend contraction are credible 3–12 month tail risks. Insider buying is a short-term positive but must be weighed against executive turnover — CFO churn is a governance red flag that compresses multiple expansion regardless of product fundamentals.

From a trade-construction perspective, asymmetric, time-defined option structures and pair trades are superior to outright leverage here: buy long-dated call optionality to capture multi-quarter execution improvements while funding with short-dated premium sales that monetize near-term pessimism. The consensus is underestimating the value of first-party behavioral data and human-in-the-loop improvements — these are non-linear revenue generators that should force a multiple re-rating if management can demonstrate sustainable enterprise adoption and yield expansion within 4–8 quarters.

Key Decisions for Investors

• FIG: Size 2–3% portfolio. Buy a Jan-2028 LEAP call spread (buy 25–35-delta LEAP, sell nearer-dated 25–35-delta call) to capture multi-quarter product monetization while capping premium. Target 3:1 upside if retention/enterprise uptake re-accelerates; max loss = premium. Trim if sequential retention declines two quarters in a row or if churn rises >15% yoy.
• TTD: Size 1.5–2% portfolio. Enter a Dec-2026 call spread after next quarter’s ad-buying cadence print (buy 12–18 month calls, sell nearer calls) to play a recovery in programmatic demand and identity-product wins. Expect flattening to low-teens growth to be priced in; reward if ad budgets reallocate back to programmatic. Hedge with a 6–9 month out-of-the-money put (cost as insurance).
• DUOL: Size 1.5–2% portfolio. Construct a bullish put spread (sell near-term 20–30% OTM put, buy deeper OTM put 6–9 months) to collect premium while taking assignment risk only if fundamentals deteriorate. This yields positive carry; close if sequential engagement metrics fall materially or if competitor free substitutes show clear MAU leakage over two quarters.
• NVDA: Size 2–4% portfolio as a directional hedge/beneficiary. Buy 9–12 month call optionality (or add delta to core position) to capture incremental infrastructure spending if platforms integrate hosted inference. Cap exposure with calendar spreads to monetize near-term volatility; reduce position if enterprise spend softens for two consecutive quarters or if supply-side guidance materially weakens.