Key Points

• Reddit's investments in AI and proprietary data could help the company deliver strong growth for years to come.

• Unity Software is a fallen growth stock with a promising turnaround strategy.

• 10 stocks we like better than Reddit ›

Reddit (NYSE: RDDT) and Unity Software (NYSE: U) are two former high-flying growth stocks that are trading well off their previous peaks. Sometimes stocks fall for good reasons, but at other times, a discounted share price can be a great buying opportunity.

Let's look at why these stocks fell, how the underlying businesses are performing, and whether they can recover their former glory.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue »

1. Reddit

Reddit has reported strong revenue growth since completing its initial public offering (IPO) last year. But the stock has fallen from its recent highs over concerns about the potential for a slowing ad market and competition in the digital advertising market.

The recent sell-off is a good buying opportunity, as Wall Street still underestimates the power of Reddit's highly engaged user base.

Despite uncertainty with the ad market and Wall Street's concerns over competition, Reddit reported robust revenue growth in the first quarter. Daily active unique users grew 31% year over year to 108 million, while ad revenue surged 61% to $359 million.

In June, Reddit announced new ad tools that promise to drive more advertising demand. These new tools are powered by artificial intelligence (AI) and will provide marketers real-time insights into discussions happening on Reddit.

Reddit is also bringing AI features to its users. Reddit Answers reached 1 million weekly users in Q1. It's basically a ChatGPT-style chatbot that pulls answers from all the discussions happening on Reddit's platform.

Reddit is growing much faster than other social media companies like Pinterest, Meta Platforms, Snap, and even Google's search business. It has a lot of valuable data on its platform, which it's monetizing by licensing it to other AI companies for use in training their models.

While the stock has already rebounded about 50% from its recent lows, it's still trading 36% off its all-time high. Analysts are expecting the company to report year-over-year revenue growth of 51% for Q2, according to Yahoo! Finance.

Another strong quarter could push the stock higher, but regardless of where the stock trades in the near term, Reddit appears on track to grow into a more valuable business down the road. Its AI investments and data are underappreciated by Wall Street, making the stock worth holding for the long term.

2. Unity Software

Unity is one of the most widely used game engines that developers use for making video games. It offers a suite of tools to make games for all the major platforms (mobile, PC, and console). It was a fast-growing business through 2023, regularly reporting more than 20% quarterly revenue growth. But the combination of an expensive valuation amid falling revenue has weighed on the share price the past few years.

The stock is down 86% from its previous highs. CEO Matthew Bromberg stepped in last year to turn the business around. Management is exiting non-essential products and services and returning Unity's business to focus on high-growth and high-margin revenue opportunities.

Investors looking at Unity's recent financial results won't see much to like. Its "portfolio reset" was responsible for the 6% year-over-year decrease in revenue last quarter. However, Bromberg's strategy could get the business back on track and unlock Unity's full potential, which isn't reflected in the stock's valuation.

Unity just completed the migration of its advertising business to its new, AI-powered platform, Unity Vector. This will allow Unity to provide deeper insights in order to deliver better advertising results for its customers. Management indicated that this won't be fully reflected in its Q2 revenue, but Vector puts the company's Grow Solutions segment, which made up two-thirds of the business last quarter, on course to deliver strong growth over the long term.

The other part of Unity's business is its Create Solutions segment, which posted an 8% year-over-year decline in revenue last quarter. This includes revenue from the tools Unity sells to game developers. It is planning three important updates to its Unity 6 software this year. One of these updates includes AI features that will help developers build games faster. This could be a significant demand driver for Unity's software.

While the company's financials look like a mess, the stock could move higher over the next year as the company returns to profitable growth. Analysts expect revenue to decline 2% for 2025 before growing 9% next year to $1.9 billion. By 2029, analysts expect Unity's focus on investing in more profitable opportunities to grow adjusted earnings per share to $2.34.

The stock is currently trading at just 13 times 2029 estimates, which is cheap. This growth stock could trade over 20 times earnings, potentially doubling the share price in the next four years.

Should you invest $1,000 in Reddit right now?

Before you buy stock in Reddit, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Reddit wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $652,133!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,056,790!*

Now, it’s worth noting Stock Advisor’s total average return is 1,048% — a market-crushing outperformance compared to 180% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of July 15, 2025

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. 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 Alphabet, Meta Platforms, Pinterest, and Unity Software. The Motley Fool has a disclosure policy.

Key Points

• Palantir's growth is on fire, but investors may also wonder whether it can continue.

• Reddit stock is once again surging, thanks to its growth and role within the AI ecosystem.

• Netflix has become a cash cow, and the future remains bright.

• 10 stocks we like better than Palantir Technologies ›

The stock market has been somewhat of a roller coaster since President Donald Trump unveiled widespread tariffs on April 2, a day the administration called "Liberation Day."

After some extremely volatile market action, stocks have since stabilized and gone on to challenge new all-time highs. Technology stocks have helped lead the charge. Palantir Technologies (NASDAQ: PLTR) surged 69% since the announcement, followed by Reddit (NYSE: RDDT) at nearly 50% and Netflix (NASDAQ: NFLX) at 36%.

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It's only natural to wonder whether stocks can sustain such impressive momentum.

Three contributing analysts from The Motley Fool tackled these leading technology names one by one to find out. Here is whether you should still buy these tech winners now.

Investors should weigh the valuation of this stock versus its growth potential

Will Healy (Palantir Technologies): Given the power of its Artificial Intelligence Platform (AIP), it may not surprise active tech investors that Palantir rose 69% since April 2.

That gain occurred as the power of its technology became better known to investors, and indeed, one does not have to look far to find AIP's success stories. One insurer reduced an underwriting workflow from two weeks to three hours, while a telecom company utilized it to save money by accelerating the process of decommissioning outdated technologies.

Palantir's financial results also seem to reflect its clients' successes. The company reported 39% yearly revenue growth in the first quarter of 2025, and its Q1 net income increased by 105% over the same period to more than $214 million.

Unfortunately, even with that gain, the company's financials may also indicate its stock is too expensive in the near term.

Palantir's trailing P/E ratio of just over 600 may give investors pause. Also, the forward P/E ratio of more than 230 confirms that the trailing earnings multiple is not an anomaly. The forward one-year P/E ratio, which measures the earnings multiple against next year's estimated earnings, is approximately 185, indicating that the current price already reflects its anticipated earnings gains years into the future.

Whether that valuation makes Palantir stock a "bubble" is a matter of debate. Bubbles are typically not apparent until after the fact, and one could argue that the power of Palantir's technology justifies the stock's valuation. Nonetheless, the chances of it being a bubble are high enough that investors should probably refrain from adding shares.

More importantly, investing is a personal endeavor. If such valuations keep you awake at night, moving your money to lower-cost investments may be a wise decision.

Shares of Reddit advanced by more than 300% since its debut in March 2024

Jake Lerch (Reddit): As of this writing, shares of Reddit have soared by nearly 50% since April 2. That's an excellent run; however, shares have performed even better when viewed on a longer time scale. Since Reddit stock debuted via an initial public offering (IPO) on March 21, 2024, it advanced by more than 300%.

So, what's behind this big move? In short, it's down to Reddit's combination of growth and its role within the artificial intelligence (AI) ecosystem.

Let's start with its growth. After years of existence as a privately held company, Reddit's debut on the stock market brought about a change in its business model. The company increased its efforts to grow its user base, lure advertisers, and increase its revenue.

In its most recent earnings report (for the three months ended March 31, 2025), Reddit reported 108 million daily average users (DAUs), up 31% from a year earlier. While those figures are impressive, Reddit still has plenty of room to grow. Meta Platforms, for example, boasts over 3.4 billion DAUs.

As Reddit scales its user base, revenue -- specifically advertising revenue -- should scale along with it. The company reported $392 million in revenue for the first quarter, up 61% year over year.

Yet, there is a second factor that has analysts and investors excited about Reddit. It is an under-the-radar AI stock. Here's why.

One of Reddit's most valuable assets is the endless stream of content that its user base produces minute by minute. That content is pure gold to AI developers, who are eager to feed it to their AI models, whether the content is scholarly articles on particle physics, silly cat memes, or anything in between. In short, the more data an AI model has access to, the better its output will be.

In turn, Reddit could strike deals to license its content to AI companies. It already has one such deal in place with Alphabet, but additional -- and more lucrative -- deals could follow.

In summary, Reddit's stock is once again surging. Growth-oriented investors would be wise to consider owning shares of Reddit now and for years to come.

Netflix has matured, but the stock still has more to give investors

Justin Pope (Netflix): One stock that continually catches my eye is Netflix, the world's leading streaming service.

The company's journey to the top of the streaming mountain has yielded impressive investment returns; the stock has risen by over 104,000% since 2022. And yet it continues to deliver for shareholders, including roughly 36% returns since Trump's "Liberation Day" announcement three months ago.

Netflix is a different business than it once was. Not only did it transition from disc rentals to a digital platform, but it also invested billions of dollars in developing a catalog of original content, thereby eliminating the need to license shows and movies from its competitors. Today, that strategy is paying massive dividends. Netflix's profit margins have soared over the past decade, since its revenue growth began overtaking the company's content budget:

NFLX Profit Margin data by YCharts

Netflix is a massive company today, worth a whopping $548 billion. Such a large stock won't replicate those prolific past returns. Nevertheless, the company still has room to grow. Its paid subscriber count increased by over 15% year over year in Q4 2024, ending the year with more than 301 million paid subscribers.

Analysts estimate that Netflix will grow its earnings by an average of almost 22% annually over the next three to five years. The stock isn't a bargain, now trading at 51 times 2025 earnings estimates, but it's a reasonable entry point for investors looking to buy, hold, and let Netflix continue to do its thing.

Should you invest $1,000 in Palantir Technologies right now?

Before you buy stock in Palantir Technologies, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Palantir Technologies wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $671,477!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,010,880!*

Now, it’s worth noting Stock Advisor’s total average return is 1,047% — a market-crushing outperformance compared to 180% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of July 7, 2025

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. 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. Jake Lerch has positions in Alphabet and Reddit. Justin Pope has no position in any of the stocks mentioned. Will Healy has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Meta Platforms, Netflix, and Palantir Technologies. The Motley Fool has a disclosure policy.

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.

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.

Should you invest $1,000 in Reddit right now?

Before you buy stock in Reddit, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Reddit wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $699,558!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $976,677!*

Now, it’s worth noting Stock Advisor’s total average return is 1,060% — a market-crushing outperformance compared to 180% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of June 30, 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. 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.

Key Points

• Reddit got a boost after introducing its new Community Intelligence product at the Cannes Lions festival.

• One analyst also said Meta Platforms' deal with Scale AI is positive for Reddit stock.

• The company has delivered impressive growth since it went public a year ago.

Shares of Reddit (NYSE: RDDT) were on a tear last month, as the stock benefited from the broader gains in the stock market, the company released a new Community Intelligence product that impressed the market, and other positive news around artificial intelligence (AI) helped lift the stock.

According to data from S&P Global Market Intelligence, the stock finished the month up 34%.

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As you can see from the chart, most of the stock's gains came in the middle of the month, though it also benefited from a late surge in the broad market as tensions in the Middle East cooled.

RDDT data by YCharts

Reddit rides the AI wave

The big news around Reddit last month was its introduction of Reddit Community Intelligence, which it unveiled at the Cannes Lions Festival. The new platform, which the company described as the "collective knowledge from the billions of human conversations across Reddit," has two main features.

The first is Reddit Insights, a tool that gives marketers real-time insights based on Reddit's 20 years of conversations to help them plan campaigns and make better decisions. The second is Conversation Summary Add-ons, an ad feature that integrates positive content from Reddit users directly below an advertiser's post.

Both products are only in alpha, meaning they're being tested by a small group of customers right now, but the initiative shows Reddit doing more to tap into its trove of user-generated content, which can fuel both AI and the company's own advertising engine. The stock jumped 19.4% over a three-day period during the Cannes festival.

Elsewhere, the company received some bullish analyst commentary around Meta's acquisition of Scale AI, which could raise the premium for the kind of data-licensing business that Reddit is trying to build with its "corpus," or body of content.

What's next for Reddit?

Reddit stock has exploded since its IPO last March, as the company has both delivered strong growth and turned profitable. Reddit had previously been operating at a loss for much of the 20 years prior to going public, and a combination of factors seem to be driving the business, including its utility in the AI era, interest in an alternate social media advertising platform, and attention around the company following its IPO.

The excitement around the new Community Intelligence tool shows that investors seem to believe in the company's potential with AI and advertising. It's unclear if that will move the bottom line anytime soon, but Reddit is a unique asset in its industry. The stock is risky, but it has considerable upside potential.

Should you invest $1,000 in Reddit right now?

Before you buy stock in Reddit, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Reddit wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $692,914!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $963,866!*

Now, it’s worth noting Stock Advisor’s total average return is 1,049% — a market-crushing outperformance compared to 179% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of June 30, 2025

Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Buying shares of competitively positioned companies that are experiencing robust growth for their products can put you on the road to financial freedom. Sometimes the market gives you the opportunity to buy quality stocks at big discounts that can set you up for outstanding results.

If you have $1,000 you don't need for at least five years, there are a few growth stocks that Wall Street is currently sleeping on that could deliver great returns over the next few years.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue »

1. Reddit

Reddit (NYSE: RDDT) is a popular online platform that is built around discussion threads on an endless number of topics. Over 400 million people visit Reddit on a weekly basis. This has driven strong growth in the company's advertising revenue, which is the primary means it monetizes its platform.

The stock is down 39% from its recent highs. This can be attributed to two things. First, it was due for a correction after climbing to a high price-to-sales multiple of around 25. It now trades at a lower multiple of 19.

Second, Wall Street has been concerned about Alphabet's Google's launch of new artificial intelligence (AI) features in Search. Google's AI Overviews, for example, is taking content from Reddit and summarizing it in Google Search results. This could lead to less traffic going directly to Reddit's platform and limit its revenue growth prospects.

However, Reddit continued to report extremely strong growth in the first quarter. Revenue grew 61% year over year, with 108 million daily active users. Advertisers continue to invest in Reddit's platform, given the high engagement from these users, not to mention that many people visiting Reddit are researching a product to buy, making it more likely they will click on an ad.

All the discussions and comments across Reddit's communities are not only leading to strong advertising growth, but also opening up new growth opportunities. In fact, Reddit is starting to make a significant amount of money licensing its data to companies building AI models. Its "other" revenue grew 66% year over year in Q1, representing about 9% of its quarterly revenue.

This growth in data licensing signals a competitive advantage for Reddit not fully reflected in the stock price. This makes the stock a compelling buy after the recent dip.

2. Marvell Technology

There is substantial investment pouring into data center infrastructure (e.g., advanced chips and networking systems) to lay the groundwork for an AI-driven economy. Marvell Technology (NASDAQ: MRVL) is riding this wave, yet the stock is down 41% from its recent high, setting up a buying opportunity ahead of a potential bull run.

Marvell is a leader in supplying custom chip solutions and networking products for data centers. Its data center business totaled 76% of its revenue last quarter and also, coincidentally, grew 76% year over year.

The chipmaker has benefited greatly from its partnership with Amazon Web Services, the leading cloud services provider for enterprises. In late 2024, it signed a new five-year deal to supply AWS with custom AI chips and networking products, which are needed for faster data transfer in AI workloads.

Marvell also has a partnership with Nvidia to integrate its chips in Nvidia's NVLink Fusion. NVLink is a game-changing product that brings together custom chip solutions from multiple suppliers on a single platform. This could spell more demand for Marvell's accelerator processing units (XPUs).

These agreements with AWS and Nvidia significantly bolster Marvell's long-term prospects. The stock looks expensive, trading at high multiples of sales and earnings. But keep in mind that it is seeing margins improve from growing demand.

Adjusted earnings more than doubled year over year to $0.62 in the first quarter. Wall Street analysts expect 46% annualized earnings growth over the next few years, which could support significant upside in the stock.

Should you invest $1,000 in Reddit right now?

Before you buy stock in Reddit, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Reddit wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $713,547!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $966,931!*

Now, it’s worth noting Stock Advisor’s total average return is 1,062% — a market-crushing outperformance compared to 177% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of June 23, 2025

John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. John Ballard has positions in Nvidia. The Motley Fool has positions in and recommends Alphabet, Amazon, and Nvidia. The Motley Fool recommends Marvell Technology. The Motley Fool has a disclosure policy.

As always, The Motley Fool cannot and does not provide personalized investing or financial advice. This information is for informational and educational purposes only and is not a substitute for professional financial advice. Always seek the guidance of a qualified financial advisor for any questions regarding your personal financial situation. If you'd like to submit your question for feedback, you can do so here.

Recently, a user on Reddit (NYSE: RDDT) posed an important financial question about the best ways to put cash to work. Specifically, the question read as follows:

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue »

$80k cash in the bank, what should I do?
byu/Exciting-Wrap-7582 inpersonalfinance

Unfortunately, there's no perfect answer, especially without more details about the commenter's personal financial situation. Although I can't offer personal advice, here are a few things to think about that could help point you on the right track, from the perspective of a Certified Financial Planner® professional.

Consider your near-term financial goals

First, let's address one of the options: continuing to save more money.

I generally advise that the stock market is no place for money that you'll need within the next five years. So if the reason you have so much cash is for a relatively near-term financial goal, such as paying for your kids' tuition, renovating your kitchen, and so on, the best answer is probably "keep saving."

Many people with near-term goals still believe that the best bet is to pay down the mortgage, with the plan of simply pulling out equity at some point. But there's no guarantee that there will be a reasonable interest rate available when you need the money, and it's important to realize that obtaining a home equity loan or cash-out refinancing isn't free -- there are considerable closing costs involved.

Investing vs. paying down your mortgage

There's a solid mathematical argument in favor of investing instead of paying down a mortgage.

Over the long term, an S&P 500 index fund has historically produced 10% annualized returns over long periods, and even an age-appropriate mix of stocks and bonds can be reasonably expected to generate 7%-8% total returns over the long term.

Of course, one major component of the decision is the specific details of your mortgage. For example, if you locked in a 30-year mortgage rate of 2.75% in 2021, it's a much clearer mathematical argument than if you have a 7% rate.

There are also other factors to consider, and a big one is mortgage insurance, which you are likely to pay if you put less than 20% down when you purchase your home. Unless you used a VA loan, or some other specialized loan, mortgage insurance can cost thousands of dollars every year. If putting $80,000 in cash (or whatever amount you have available) allows you to drop mortgage insurance and saves you hundreds of dollars per month, it could help swing the pendulum in the favor of paying down your mortgage.

As a general guideline, if your mortgage interest rate is several percentage points lower than what you can reasonably expect from investing the money, investing is generally how I'd go. If it's a relatively small difference, it's a little tougher.

It's also considering your age and proximity to retirement. One common goal to help keep expenses low is to pay off a home completely before leaving the workforce, and if this is the case, it can certainly make sense to accelerate your mortgage repayment.

Consider your own peace of mind

It's important to mention that the best move for you might go beyond mathematics and logic. Some people simply sleep better at night if they have less debt. If getting out of debt is a goal for you, paying down your mortgage can be the best decision, even if you have a mortgage with a low interest rate.

Another consideration is that some people simply feel better with a large cash cushion in the bank. The point is that whatever the math says, it's important to take your own mental well-being into consideration.

As a final thought, if you do choose to keep the money in cash in savings, that doesn't mean you can't generate any returns on it. There are some excellent high-yield savings accounts offered by top-notch financial institutions that are paying interest rates in the 3%-4% range as of this writing. With a large amount of cash, simply finding the best savings account could result in thousands of dollars of extra income each year.

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Matt Frankel has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Reddit (NYSE: RDDT) and Snap (NYSE: SNAP) are social media companies operating in the massive advertising industry.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue »

*Stock prices used were the afternoon prices of May 29, 2025. The video was published on May 31, 2025.

Should you invest $1,000 in Reddit right now?

Before you buy stock in Reddit, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Reddit wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $657,385!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $842,015!*

Now, it’s worth noting Stock Advisor’s total average return is 987% — a market-crushing outperformance compared to 171% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of June 2, 2025

Parkev Tatevosian, CFA has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. Parkev Tatevosian is an affiliate of The Motley Fool and may be compensated for promoting its services. If you choose to subscribe through his link, he will earn some extra money that supports his channel. His opinions remain his own and are unaffected by The Motley Fool.

Investing in growth stocks has the potential to generate above-average returns in the long term.

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*Stock prices used were the afternoon prices of May 29, 2025. The video was published on May 31, 2025.

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*Stock Advisor returns as of June 2, 2025

Parkev Tatevosian, CFA has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends DigitalOcean. The Motley Fool has a disclosure policy. Parkev Tatevosian is an affiliate of The Motley Fool and may be compensated for promoting its services. If you choose to subscribe through his link, he will earn some extra money that supports his channel. His opinions remain his own and are unaffected by The Motley Fool.

Shares of Reddit (NYSE: RDDT) were sliding this week in response to an analyst downgrade on the social media stock. It fell sharply in the broader sell-off on Wednesday in response to a weak Treasury auction and rising Treasury yields, perhaps reflecting a lack of confidence in the U.S. economy and recessionary fears.

According to S&P Global Market Intelligence, the stock was down 11.6% through Thursday at 2:10 p.m. ET.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue »

Reddit faces a new threat

The stock fell 5% on Monday in response to Wells Fargo's downgrade of Reddit stock from overweight to equal weight, with analyst Ken Gawrelski lowering its price target from $168 to $115.

The firm called out Alphabet's Google's artificial intelligence (AI) advances and new AI search capabilities, believing that will likely sap Reddit's user growth, especially from logged-out users, which Gawrelski believes Reddit will need to maintain its strong growth rate. Additionally, the analyst said its data licensing business is incompatible with the long-term growth of the business, as it will leverage Reddit's knowledge base elsewhere.

On Wednesday, the stock tumbled again in line with the broader sell-off, losing 9.3% as growth stocks like Reddit are especially sensitive to rising interest rates and broader threats to the economy.

What's next for Reddit?

The social media stock has delivered strong results in a little over a year since it went public, driving strong user growth and ad revenue growth, and its AI-based data licensing business still appears to have a bright future.

Reddit has a unique and massive "corpus" of content on a wide range of topics, and it's more than a search hub, as users go there to get advice or feedback from other people, which is different from using an AI chatbot.

The company will have to continue delivering strong growth and improve its profitability, but one downgrade shouldn't shake investor confidence in the business.

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Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $644,254!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $807,814!*

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*Stock Advisor returns as of May 19, 2025

Wells Fargo is an advertising partner of Motley Fool Money. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Jeremy Bowman has positions in Wells Fargo. The Motley Fool has positions in and recommends Alphabet. The Motley Fool has a disclosure policy.

In a week of market volatility, the adtech sector was on fire this week after a down week to start April. The recovery is no surprise, as investors got a bit of good news from the Trump administration -- at least relative to what we knew a week ago.

According to data provided by S&P Global Market Intelligence, shares of AppLovin (NASDAQ: APP) were up as much as 19.9%, Reddit (NYSE: RDDT) jumped 17%, and Spotify (NYSE: SPOT) was up 12.7%. The stocks were up 13.9%, 15.1%, and 8.4%, respectively, for the week on Friday at 3:10 p.m. ET.

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Tariffs delayed

The announcement on Wednesday that tariffs on most countries around the world would be delayed by 90 days was met with wild enthusiasm by the market. Stocks shot up across the board, and that included a lot of tech companies and those who benefit from consumer spending and advertising, like AppLovin, Reddit, and Spotify.

To be clear, the news isn't all good. The 10% tariff across the board is still in place, and the tariff on goods from China is 125% or more, depending on the time of day. Compared to the start of the month, tariffs are up, but the market is happier today than it was a week ago.

Advertising wins?

If a recession, which seemed extremely likely on a week ago, is avoided, it would be a boost to advertising companies, because consumers will be spending on more goods, and so will advertisers. That's part of the reason these companies rose so much this week.

But there may still be headwinds. The companies advertising on these platforms have costs, and if their costs are going up because of tariffs, it may leave less money for customer acquisition on advertising platforms. On top of that, there's still a very real possibility of a recession this year.

Higher costs across the board

The other two factors to layer in are rising interest rates and a falling dollar. A lower dollar makes it more costly to import goods from other countries -- and that's on top of the tariff impact.

Higher interest rates make it more costly to do everything from borrowing to start a business to buying a home. Higher rates are generally an indicator of slower growth, so that could be a headwind for the market.

More uncertainty ahead

While this week was generally positive compared to last week, investors aren't out of the woods yet. It's not yet clear if the 90-day pause on wider tariffs will lead to deals, or if higher costs are only put off for a few months. Then there's the China tariffs, which are currently at 145%, but seem to change by the minute.

The market doesn't know what to expect, and that's part of the problem. What we do know is that consumer sentiment is falling, and it's likely we will see inflation pick up later this year. That alone could be a reason for caution for companies counting on higher advertising spending to grow their revenue in 2025.

Should you invest $1,000 in AppLovin right now?

Before you buy stock in AppLovin, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and AppLovin wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $496,779!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $659,306!*

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See the 10 stocks »

*Stock Advisor returns as of April 10, 2025

Travis Hoium has positions in Spotify Technology. The Motley Fool has positions in and recommends AppLovin and Spotify Technology. The Motley Fool has a disclosure policy.