When ASX growth shares fall 40% to 50% from their highs, it's natural to assume something has gone wrong. Sometimes that's justified. But in other cases, the sell-off reflects changing market sentiment rather than a deterioration in the business itself.
Right now, I think the market has thrown the baby out with the bathwater on a few high-quality ASX growth names.
These are not early-stage stories with unproven models. They are established businesses that are now trading at levels that look far more reasonable than they did at their peaks.
These are three sold-off ASX growth shares I think are worth a serious look.
Zip Co Ltd (ASX: ZIP)
What's happened to Zip's share price has far more to do with the market than the business.
Zip hasn't stumbled operationally. It continues to grow, expand merchant relationships, and increase customer engagement. The problem is that investor appetite for fintech and payments stocks has cooled dramatically, regardless of execution. Valuations have compressed across the sector, and Zip has been caught up in that broader reset.
What I find appealing now is that Zip is still growing, but it's doing so with a much clearer focus on sustainable economics. Losses have ended, costs are under control, and the business no longer needs constant external funding to survive. In other words, Zip looks healthier today than it did when its share price was far higher.
To me, that disconnect between operational progress and share price performance is exactly what creates opportunity. If sentiment toward tech and fintech stabilises, Zip doesn't need to do anything heroic to justify a higher valuation. It just needs to keep doing what it's already doing.
Xero Ltd (ASX: XRO)
Xero's sell-off has been more about uncertainty than underperformance.
The business itself continues to grow strongly. Subscriber numbers are rising, churn remains low, and Xero keeps generating solid cash flows. The concern isn't demand for cloud accounting software. It's whether the next phase of growth looks as clean as the last one.
Two issues have weighed on sentiment. The first is artificial intelligence (AI). Investors are still working out whether AI becomes a threat, a tool, or both for accounting platforms. Xero has been clear that it sees AI as an enabler, but until that strategy is fully visible, some doubt will linger.
The second is the $4 billion acquisition of Melio, which completed in October. It's a bold move and one that introduces execution risk. Integrating a large US payments platform into Xero's ecosystem won't be trivial, and the market is understandably cautious about paying upfront for benefits that will take time to materialise.
That said, I think the sell-off assumes too much goes wrong and too little goes right. Xero doesn't need Melio to transform the business overnight. Even modest success in cross-selling and monetisation could significantly expand Xero's addressable market over time.
With the shares down more than 50% from their highs, I think the market is pricing in a worst-case outcome. For a business that continues to grow, generate cash, and invest for the long term, that feels overly pessimistic to me.
WiseTech Global Ltd (ASX: WTC)
WiseTech's share price decline has been driven by a mix of company-specific issues and broader growth stock de-rating.
What's different this time is that expectations have been thoroughly reset. Growth is no longer assumed. It needs to be delivered. That's uncomfortable in the short term, but healthy over the long run.
WiseTech remains deeply embedded in global logistics workflows, with a platform that becomes more valuable as complexity increases. The shift toward a new commercial model and the integration of large acquisitions have introduced uncertainty, but they also create the potential for a more scalable and predictable earnings base if executed well.
At 55% below its highs, I think the market is pricing in a lot of things going wrong and very little going right. For patient investors, that imbalance is where opportunity often emerges.
Foolish takeaway
Not every sold-off ASX growth share deserves a second look. But Zip, Xero, and WiseTech are not broken businesses. They are businesses that were priced for perfection and then re-rated when reality intervened.
With expectations lower and valuations more grounded, I think these shares now offer something they didn't at their peaks: a margin of safety.
