While some stocks have been rightly beaten down by the market at large, the whims of investors who influence stock prices may only paint part of the picture. Often the performance of the underlying business is far more nuanced. Sometimes a stock with a struggling business is doing well from a share price perspective, while a company that is delivering solid financial results is dumped by investors.

If you're looking for intriguing businesses and have $1,000 to invest right now, there are plenty of stocks that could make compelling additions to a well-diversified portfolio. The following two stocks have been beaten down by the market this year for very different reasons, and both are trading for less than $100 per share.

Let's take a closer look.

1. Shopify

Shopify (SHOP 1.41%) is down about 13% from its starting price at the beginning of 2024. At the time of this writing, a single share of Shopify will run you about $64. From a price-to-sales (P/S) perspective, Shopify trades around 11.6, with a price-to-book (P/B) value of 9.6. That's a valuation the stock hasn't had in years.

Some investors have been put off by the company's fluctuating profitability and overall growth decelerations from the height of its pandemic successes. It's been a bumpy ride for Shopify investors the last few years, but if you're investing in the stock to hold on to it for several years at least, I'd argue it's still worth taking a closer look.

Shopify has been delivering a series of financial improvements following the bumpy post-pandemic period. It also slashed costs considerably in recent quarters, through a series of initiatives including layoffs and the divestiture of its logistics business. The sale of its logistics business is still having a lingering impact on its financials, and Shopify may still record charges related to that transaction in the near future.

At the same time, Shopify is investing aggressively in its ecosystem of offerings for merchants, which is translating to steady revenue growth as it moves on from pandemic successes. The company is driving international expansion forward, and growing its cohort of enterprise brands onboarding as customers in addition to smaller merchants. It also retains a notable slice of a fast-growing addressable market while generating considerable free cash flow.

There were plenty of high points in Shopify's first-quarter earnings report. Gross merchandise volume rose 23% year over year to just shy of $61 billion. Revenue totaled $1.9 billion for the three-month period, a 23% year-over-year increase (or 29% when adjusted for the sale of its logistics business).

From a profitability standpoint, the company reported a net loss under generally accepted accounting principles (GAAP), but it reported a GAAP gross profit of $957 million. That was a 33% year-over-year increase, and represented a 51.4% gross margin. Shopify generated free cash flow of $232 million in the three-month period.

Management is forecasting that the sale of its logistics business will weigh on revenue and gross margins in its next financial report. Still, the company is forecasting revenue growth in the low- to mid-20s when adjusted for these factors.

Shopify's move toward an increasingly asset-light business along with its continued market leadership in the global e-commerce space are compelling factors for the stock. Its current depressed valuation may be another factor that could induce some investors to buy on the dip.

2. Upstart

Upstart (UPST 2.65%) is down approximately 43% from the start of the year. A single share costs about $22 at the time of this article. That's a P/S of 3.5 and a P/B of 3.2 based on current share prices.

Upstart was thriving a few years ago when interest rates hit an all-time low and macro conditions for underwriting loans were noticeably favorable. Revenue and profit were accelerating at an incredible rate. While that level of growth may not have been sustainable long term, the Fed's rapid hikes of interest rates brought significant headwinds for the lending industry as a whole.

Upstart's platform isn't designed to underwrite loans. Instead, Upstart operates as a middleman between consumers seeking credit and the growing number of banks, credit unions, and institutional investors it partners with to fund loans. Its platform uses artificial intelligence and machine learning to assess consumer creditworthiness.

This not only expedites the lending process but helps ensure access to credit to a wider range of consumers. Upstart's platform uses more than 1,600 variables trained on more than 65 million repayment events to reach a lending decision, not just the credit score only model. Rising interest rates have wreaked havoc on the business, even as its lending model continued to improve in accuracy and automation.

The macro environment has made the cost of funding loans much higher and riskier for Upstart's institutional partners. Consumer appetite to apply for loans has dampened, and the risk of default is higher than in the past. All of these elements drove down profitability and loan volume. Upstart has also had to carry more loans than usual on its own balance sheet, although institutions are still funding the lion's share of loans.

Revenue in the first quarter of 2024 totaled $128 million, which was a nice 24% bump from the same quarter last year although down 9% from the prior quarter. Total fee revenue rose 18% year over year to $138 million. On another positive note, Upstart processed $1.1 billion in loans in the first quarter, a 13% increase from the prior year.

In addition to an improvement in lending volume, Upstart also improved its net loss to $64.4 million, about half of the net loss it reported in the first quarter of 2022. Moreover, 90% of loans are now fully automated, a new record for the company, and 91% of loans that are approved on an automated basis are converted to funded loans.

In its auto loan program, 103 auto dealers now use its lending software. And its small dollar loan program grew 80% sequentially. Upstart is also working to aggressively cut costs, which in addition to well-publicized layoffs have included cutting its cloud infrastructure costs by 23%.

It will take time to right the ship, there's no doubt about that. And it's important for investors be aware if they take a position in this stock that it is heavily dependent on the fluctuations of the macro environment at large. On the flip side, Upstart's revolutionary AI-driven model could continue to disrupt the lending space, a broad total addressable market in which it is penetrating into multiple lucrative segments like personal lending, auto loans, and more. For investors with a solid risk appetite, scooping up a few shares to add to a well-diversified portfolio of 25 stocks or more could be a good move.