It has been a challenging year for investors with exposure to tech stocks. The tech-heavy Nasdaq Composite index is down 30% from all-time highs, and several tech stocks have declined by a much wider margin. 

While tech stocks were trading at sky-high valuations prior to the market sell-off, the ongoing volatility offers investors to buy quality companies at a discount. Here, we look at two beaten-down tech stocks in Zoom Video (NASDAQ: ZM) and Okta (NASDAQ: OKTA) that have significant upside potential given consensus price targets.

Zoom Video

The COVID-19 pandemic acted as a massive tailwind for Zoom Video, allowing the video collaboration company to increase sales from $622.6 million in fiscal 2020 to $2.65 billion in fiscal 2021 and $4.1 billion in fiscal 2022 (ended in January). In the last two years, Zoom's sales have increased by 157% annually.

Due to the rising demand for Zoom's products, its stock price touched a record high of $559 in October 2020. Zoom stock is currently trading at $99, which is 83% below all-time highs. 

The reopening of economies and workplaces has resulted in a deceleration of top-line growth. Analysts expect Zoom Video to increase revenue by 10.8% to $4.54 billion in fiscal 2023 and by 13.2% to $5.14 billion in fiscal 2024. 

Zoom is valued at 6.5 times forward sales and a forward price to earnings multiple of 26x, which is not too expensive. The company ended its most recent quarter with $5.7 billion in cash, providing it with enough flexibility to expand its product portfolio and reinvest in growth via acquisitions. 

In fiscal Q1, enterprise customers increased spending by 123% on Zoom in the trailing 12 month period. Further, customers contributing over $100,000 in annual sales surged by 46% year-over-year to 2,916. 

Zoom remains a top long-term bet, given companies worldwide are looking to provide a flexible workplace to retain employees. These secular trends should be a positive catalyst for Zoom and other collaboration companies.

Zoom stock is trading at a discount of 55%, given 12 month consensus price target estimates. 

Okta

Okta is valued at a market cap of $15.06 billion and is down 67% from all-time highs. Similar to Zoom, shares of Okta are also trading at pre-COVID-19 levels. Okta is currently valued at 8.3x forward sales, its lowest valuation as a publicly listed company. At its peak in January 2021, Okta was trading at 32 times forward sales. 

Okta estimates its total addressable market at $80 billion. In the last 12 months, its total sales stood at $1.46 billion, providing it with enough room to grow revenue higher in the upcoming decade. 

In Okta's fiscal Q1 of 2023 (ended in April) earnings call, the company emphasized it expects revenue to touch $4 billion by fiscal 2026, indicating annual growth rates of 35%. It also expects to end 2026 with an impressive free cash flow margin of 20%. 

Okta's sales grew 65.3% year-over-year in its most recent quarter to $415 million. The demand for cybersecurity solutions should remain robust given the worldwide shift towards digital products and services. 

Okta's customer base in the last 12 months has more than doubled to 15,800. Further, existing customers increased spending by 23% on Okta's platform suggesting strong retention rates. 

While Okta remains unprofitable, it ended Q1 with more than $2.5 billion in cash and equivalents. Okta stock is trading at a discount of almost 60% compared to consensus price target estimates.