A lot of growth stocks have been hit hard in the recent market sell-off. This isn’t surprising – when volatility spikes, investors tend to gravitate towards lower-risk, blue-chip companies.
Are opportunities emerging for long-term investors? Absolutely. Here are two growth stocks down 40% or more that have a ton of potential.
The number one company in public safety
First up, we have Axon Enterprise (NASDAQ: AXON). The maker of Taser technology, it’s a global leader in public safety solutions.
This stock’s been a phenomenal long-term investment. Over the last 10 years, it’s risen more than 2,000%. Recently though, it’s come crashing down. Currently, it’s about 45% off its highs.
So I think it’s time to give it a closer look. I certainly am.
Axon’s recent Q4 2025 results showed why this company’s been such a good investment. For the year, revenue was up 33% year on year to $2.8bn, marking the fourth consecutive year of annual growth above 30%.
For 2026, the company expects revenue to grow 27%-30%, which would take its top line to around $3.6bn. Looking further out, it’s targeting revenue of $6bn by 2028.
What’s driving this growth? Well, right now, the company’s benefitting from a ‘perfect storm’ of factors – increasing levels of unrest globally, lower levels of police staffing, and more demand for policing transparency.
Looking ahead, the company has a huge opportunity in terms of global expansion. Today, the majority of its revenue comes from the US.
Now, the downside to this stock is that it’s still expensive, even after the 45% share price drop. The forward-looking price-to-earnings (P/E) is currently about 59 – this doesn’t leave any room for a slowdown in growth.
Taking a five-year view though (our preferred time horizon here at The Motley Fool), I’m pretty confident that the company will grow into its valuation and reward investors. So I think it’s worthy of further research today.
A play on the Great Wealth Transfer
The other stock I want to highlight is Robinhood Markets (NASDAQ: HOOD). It operates one of the most popular – and fastest-growing – investment and trading platforms in the world.
Back in October, its share price was above $150. Today however, it’s around $70. At that price, the forward-looking P/E using next year’s earnings forecast is only 24. I see value at that earnings multiple.
Like Axon, this company’s growing at breakneck speed. Last quarter, revenue was up 27% year on year to $1.3bn. One factor behind this growth is the company’s incredible level of innovation. Today, it offers commission-free stock trading, options trading, crypto, prediction markets, tokenised stocks, private markets, banking, social trading, and more.
In the long run, I see a ton of growth potential. Because Robinhood’s platform is immensely popular with younger investors, over the next few decades these investors are likely to inherit trillions from older generations.
Of course, a major meltdown in the financial markets could derail the growth story here. This could see people lose interest in investing.
Taking a five-year view though, I like the risk/reward set-up. I believe the stock’s worth a look.
