It has been a few rough months for these 2 ASX growth shares. Temple & Webster Group Ltd (ASX: TPW) and Xero Ltd (ASX: XRO) have tumbled 51% and 31% so far this year, respectively.
For long-term investors, market pullbacks can sometimes create attractive entry points into companies with strong competitive positions and large growth opportunities.
For that reason, these 2 ASX growth shares could be worth a closer look today.
Image source: Getty Images
Temple & Webster: Largest pure-play online retailer
The ASX growth share plummeted almost 8% to $6.83 on Thursday. This appears to be driven by concerns about how the war in the Middle East could affect the online furniture and homewares retailer.
Surging shipping costs have raised fears that profitability could come under pressure in the second half of FY 2026.
The latest fears add to earlier concerns about slowing growth and margin pressure. Heavy discounting and marketing spending have squeezed profitability, leading to earnings that missed analyst expectations in recent results.
However, the fact remains that Temple & Webster is Australia's largest pure-play online retailer focused on furniture and homewares. The ASX growth share operates a marketplace model that connects suppliers with customers. This allows the business to scale its product range without the heavy inventory costs faced by traditional retailers.
The company's long-term strategy is centred on capturing market share in a fragmented industry. Management is targeting more than $1 billion in annual revenue by FY 2028.
Revenue momentum has remained strong, with the business reporting nearly 20% sales growth in the first half of FY26.
Despite concerns, many brokers remain optimistic about the long-term opportunity of the ASX growth share. Bell Potter is bullish, with a buy rating and a $13 price target. That implies potential upside of around 90% over the next 12 months.
Xero: US acquisition to accelerate growth
Xero is one of the world's leading cloud accounting platforms for small businesses.
The $14 billion ASX growth share provides accounting, payroll, and financial management software through a subscription model that generates highly predictable recurring revenue. Today, Xero has more than 4 million subscribers globally, with strong positions in Australia, New Zealand, and the United Kingdom.
One of the biggest strengths of the business is its powerful ecosystem. By connecting accountants, small businesses, and financial service providers, the platform becomes more valuable as more users join.
Looking ahead, management is focused on expanding in the US, the world's largest market for small-business accounting software. Its US$2.5 billion acquisition of payments platform Melio is designed to accelerate that strategy and strengthen its payments ecosystem.
That said, risks remain. International expansion can be expensive, and integrating acquisitions like Melio carries execution risk.
Analysts remain broadly positive on the ASX growth share. Analysts expect Xero's earnings to grow at around 21% per year over the next few years, reflecting the long runway ahead for cloud accounting adoption globally.
The ASX growth share currently carries a buy consensus rating, with an average price target implying roughly 94% upside from current levels.
UBS is very bullish. It currently has a buy rating and $174 price target on Xero's shares, which implies potential upside of over 120%.
Foolish Takeaway
Temple & Webster and Xero have both experienced sharp share price pullbacks, but their long-term growth stories remain largely intact.
For investors willing to tolerate some volatility, these two beaten-down ASX growth shares could potentially reward patient shareholders over the years ahead.
