2 Stocks Down 23% to 57% to Buy Right Now

As market observers know, the Nasdaq Composite index and the S&P 500 index are hovering at or near all-time highs. While that is typically good news for investors, it can also mean that buying opportunities for stocks in these benchmark indexes have largely disappeared, a situation that may force investors to pay premium prices for stocks they are interested in.

Fortunately, there are still some tech stocks that have either not realized their potential or have suffered in a short-term sell-off that may only affect that stock itself or a subsector. That means investors can still find opportunities. Below, two Motley Fool contributors discuss how the short-term pullback in a couple of stocks could signal some buying opportunities.

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Investors interested in The Trade Desk may want to get on the buy side of this buy-side platform

Will Healy (The Trade Desk): Since its 2016 initial public offering (IPO), both customers and investors have been bullish on The Trade Desk (NASDAQ: TTD). The buy-side digital platform allows advertisers and ad agencies to buy digital ad space on the platforms and the programs most likely to deliver positive returns for one's advertising dollar. Customers also flocked to The Trade Desk for its neutrality. Since Alphabet's Google and Amazon are also ad platforms, those ad-buying systems have a greater potential for ad bias that may not favor the customer.

Unfortunately, The Trade Desk's growth trajectory hit a wall in 2025 not long after the company missed its own revenue projection for the fourth quarter of 2024. Investors panicked, sending the stock price down 57% from its 2025 high.

Another concern affecting the stock price is that platforms such as Google and Amazon have increasingly become "walled gardens." This has made it more challenging to buy ads on those platforms using The Trade Desk's system.

Finally, the company's transition this year from the legacy user interface, Solimar, to the generative AI-based platform Kokai has experienced significant hiccups. Kokai confused many of its users and removed some features that were popular on Solimar, disappointing customers and even leading to lawsuits.

Fortunately, the company and stock may be on the mend. The Trade Desk has begun to address complaints with Kokai, and with revenue up 22% year over year for the first half of 2025, the platform continues to attract more business. As a result, the stock is up 17% since mid-September.

Potential investors should note that The Trade Desk's 62 P/E ratio is still double the S&P 500 index average. Still, this stock has historically traded at a premium, and it is currently far below the 150 earnings multiple where it began the year. As The Trade Desk continues to address complaints with Kokai and contend with its mega-tech competitors, the stock will likely recover lost ground over time.

Concerns over data licensing revenue might offer savvy investors a chance to buy Reddit shares on the dip

Jake Lerch (Reddit): It may come as a surprise to some, but, as of this writing, shares of Reddit (NYSE: RDDT) are down 23% from their all-time high set earlier in this year. That's a significant pullback for a stock that has advanced more than 508% since its initial public offering (IPO) in March 2024.

So, what gives? Why has Reddit taken a step back? More importantly, what makes it worth considering right now?

Concerns have emerged that key artificial intelligence (AI) models, such as OpenAI's ChatGPT, are citing fewer Reddit sources in their responses. This has led some analysts to suggest that developers have analyzed Reddit's data and found it lacking. Consequently, the theory goes, developers are downgrading Reddit's data in training their models, thus lowering the value of its data and, in turn, reducing AI-driven traffic to Reddit's pages.

There's an obvious downside here for Reddit. If these concerns are valid, then Reddit's data isn't as valuable to AI developers, which could hurt the company in two key ways:

First, the company generates a share of its revenue by licensing data to AI developers. If the data's value drops, so will Reddit's ability to monetize that data going forward.

Second, if AI developers reduce their reliance on Reddit as a source, site traffic could suffer. This is the greater concern for Reddit, as nearly 90% of its revenue comes from advertising, rather than data licensing.

Granted, these concerns are legit, and investors shouldn't overlook them entirely. However, for now, I remain bullish on Reddit stock.

That's because, as of the company's latest earnings report (for the three months ended June 30, 2025), key metrics such as user growth, revenue growth, and earnings growth remained solid. That is the most recent official reporting we have on the company's performance.

Therefore, I'm happy to wait until its following earnings report to see if there is any truth to the rumors that Reddit's key metrics are at risk. The company is expected to report earnings around Nov. 3, 2025. Until then, investors who still believe in Reddit's long-term growth story may want to consider buying on the dip.

Investing in The Trade Desk and Reddit

Both The Trade Desk and Reddit have suffered as doubts emerged about the competitive advantages of each business. Indeed, such doubts tend to lead to a sell-off in a given stock, and sometimes, the stock declines can be particularly severe.

However, part of being a successful investor is discerning whether investors have overreacted to a new situation, or is the issue one that actually could undermine the long-term investment thesis for a company. Admittedly, sometimes it is hard to tell.

Nonetheless, both The Trade Desk and Reddit continue to grow in popularity and, by extension, revenue. Assuming that trend continues, both stocks are likely to trend higher over time.

Jake Lerch has positions in Alphabet, Amazon, Reddit, and The Trade Desk. Will Healy has positions in The Trade Desk. The Motley Fool has positions in and recommends Alphabet, Amazon, and The Trade Desk. The Motley Fool has a disclosure policy.