2 Stocks Down 58% and 30% to Buy Right Now

Key Points

• Reddit stock has slumped despite rapid growth and opportunities for better monetization.

• Paycom stock is still reeling from its revenue slowdown.

• Both stocks look appealing for long-term investors.

The stock market is carving out new all-time highs, but some individual stocks have yet to fully recover. Reddit (NYSE: RDDT) and Paycom (NYSE: PAYC) are still well off their respective peaks, presenting an opportunity for long-term investors. Both companies face risks, but solid growth stories make Reddit and Paycom attractive stocks.

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Reddit: Down 30% from its high

Social media company Reddit has become a key source of reliable information for internet users. Standard search engines, riddled with ads and content designed to rank rather than provide solutions, are far less useful today than they were in the earlier days of the web.

Reddit is now working to better monetize its more than 400 million weekly active unique users. Average quarterly revenue per unique user stood at just $3.63 in the first quarter, compared to more than $12 for Meta Platforms. That metric was up 23% year over year for Reddit in the first quarter, while overall revenue soared by 61%. Reddit has been launching new features for advertisers, including dynamic product ads in May and personalized guidance and insights in June.

Reddit does face some risk from artificial intelligence (AI) as people turn to chatbots and other AI tools for answers. However, Reddit's reputation for providing reliable information may be enough to overcome the AI threat. AI isn't particularly reliable or trustworthy, so many users may still opt for Reddit when looking for product recommendations and other information that leads to purchases.

Reddit stock has been recovering in recent weeks, but it remains down around 30% from its all-time high. The stock is pricey, trading for nearly 16 times the average analyst estimate for 2025 sales. That valuation may be tough to swallow, but Reddit has the potential to grow revenue at a strong double-digit pace for many years to come. For long-term investors, Reddit is the social media stock to own.

Paycom: Down 58% from its high

Shares of payroll and HR software provider Paycom began a steep descent in late 2022, and it picked up steam in 2023 as the company's automated Beti product started cannibalizing other sources of revenue. Beti is a breakthrough product that allows employees to manage their own payroll, and it can greatly reduce administrative overhead. However, in the short term, the product's rollout led to a sharp slowdown in revenue growth.

Paycom's revenue growth rate hovered around 30% in the years leading up to the pandemic, and while it took a hit in early 2020, it bounced back to those 30% levels soon after. The situation changed drastically with Beti. Revenue grew by just 11% in 2024, and it was up 6% year over year in the first quarter of 2025.

While the revenue slowdown is a concern, Paycom's willingness to disrupt itself to deliver superior returns on investment to its customers should pay off in the long run. Beti is an attractive product for companies looking to reduce costs, and customers who adopt Beti will likely churn at a lower rate. Once the dust settles, growth should accelerate once again.

One major risk facing Paycom is the state of the economy. Paycom is sensitive to the labor market, and there are some signs that it's starting to crack in the face of U.S. tariffs and economic uncertainty. An economic slowdown could delay Paycom's comeback, but the company is well positioned for the future with Beti. Trading at around 26 times forward earnings, with the potential for robust earnings growth in the years ahead, Paycom stock looks like a good deal for long-term investors.

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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. Timothy Green has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Meta Platforms and Paycom Software. The Motley Fool has a disclosure policy.