Investors Can Find Opportunities in Recent Stock Market Dip

The recent market correction has caused unease among some investors. However, historically, the stock market typically rises for extended periods more than it falls. These dips present an opportunity to enhance returns by securing shares at a better value relative to company revenue and earnings. Below are two emerging companies worth considering for long-term gains during this downturn.

1. Meta Platforms

Meta Platforms (NASDAQ: META) has provided substantial returns over the past decade, with shares increasing over 585%. This performance is driven by strong annualized revenue growth of 29%, with expectations for continued high growth rates to deliver more market-beating gains in the future.

Meta enjoys a massive user base, boasting over 3.3 billion daily active users across platforms like Instagram, Facebook, Threads, and WhatsApp. This extensive reach makes it an attractive venue for advertisers. With half of the global population engaging with one of its applications daily, Meta’s revenue surged by 22%, totaling $164 billion last year.

Meta’s robust advertising revenue propels significant growth in earnings. In the fourth quarter, despite investing $19 billion in operational expenses for its suite of apps, the company generated nearly $21 billion in net income. Over the past year, earnings per share have increased by 60% compared to 2023.

A key investment area for Meta is artificial intelligence (AI). The Meta AI assistant is expected to reach over 1 billion users this year, with management focusing on personalization to boost engagement and advertising growth. Additionally, AI could unlock future revenue opportunities in premium services, which are not adequately reflected in the stock‘s current valuation.

Concerns regarding the economy and the advertising market have led to a 22% decline in stock prices from recent highs. However, past downturns related to advertising market fears created significant buying opportunities. For instance, Meta’s share price increased by 375% after hitting a low in 2022 as the ad market rebounded.

The digital advertising market represents a major long-term driver for Meta’s business. With such a vast audience, the company is well-positioned to benefit as advertisers allocate more budget to its platforms. The stock currently trades at only 22 times this year’s earnings estimates, making it appealing given long-term earnings growth predictions of 17%, according to Wall Street consensus.

2. Reddit

Investing in Reddit (NYSE: RDDT) offers exposure to one of the fastest-growing online communities. After its 2024 initial public offering, the stock surged over $200 before experiencing a 53% drop from its peak this year. Reddit’s revenue climbed 62% last year, positioning it as a promising growth stock for the future.

Similar to Meta, Reddit is capitalizing on the booming social media ad market, which Statista projects to reach $276 billion by 2025. Given its trailing revenue of only $1.3 billion, this presents a considerable opportunity. With 379 million users visiting Reddit each week for diverse information, the platform is well-situated to capture an increased share of ad spending as it flows towards popular platforms.

One of Reddit’s strengths lies in its community focus, especially its subreddits, which attract users seeking connections based on shared interests. This strategy creates a compelling platform for both users and advertisers. In the fourth quarter, the number of logged-in users grew by 27% year-over-year, which in turn raised its average revenue per unique user by 23% year-over-year.

Additionally, Reddit is poised for international growth. The company has begun utilizing AI to enhance content accessibility for non-English speakers, which could significantly broaden its user base.

The stock is trading at a more manageable valuation following its decline from recent highs. Although a price-to-sales ratio of 12 may seem high, analysts believe Reddit’s growth trajectory justifies this valuation as it capitalizes on the increasing ad spend.

Don’t Miss This Opportunity

Have you ever felt like you missed out on investing in successful stocks? Now might be your chance.

Our analysts occasionally make a rare “Double Down” recommendation for stocks they anticipate will gain traction. If you’re concerned about missing your opportunity, now is the ideal time to act before it’s too late. The past performance of these stocks supports the rationale:

• Nvidia: A $1,000 investment when we doubled down in 2009 would be worth $285,647!
• Apple: $1,000 invested when we doubled down in 2008 would have grown to $42,315!
• Netflix: A $1,000 investment made when we doubled down in 2004 has increased to $500,667!

Currently, our “Double Down” alerts are available for three impressive companies, and opportunities like this may not present themselves soon.

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*Stock Advisor returns as of April 1, 2025

Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. John Ballard has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Meta Platforms. The Motley Fool has a disclosure policy.