Reddit has affectionately dubbed itself "the front page of the internet," serving people with a continuous feed of news, stories, pictures, memes, and -- increasingly in recent years -- largely unvetted musings on the stock market.
Several so-called investing "subreddits" -- forums on the site for groups of people interested in a common subject -- have millions of dedicated followers, and have occasionally dominated headlines for driving significant moves in individual stocks. In fact, there are several websites dedicated to continuously tracking the top trending stocks on Reddit each day with the hope of capitalizing on their momentum.
You should always perform your own due diligence, of course, taking the investing opinions of internet strangers with a grain of salt. But in the spirit of both Reddit's thriving online investing communities and The Motley Fool's long-term approach to owning stocks, here are two so-called "Reddit stocks" I believe are worth buying and holding for years.
This stock could literally go "to the moon"
When I had the privilege of interviewing Rocket Lab (RKLB 3.29%) CEO Peter Beck shortly after the company's IPO in 2021, he noted that investors today enjoy the opportunity to participate in "a pivotal time within the [space] industry" where it's finally shifted away from government and toward commercial, private, and now publicly traded businesses.
Indeed, Rocket Lab is an end-to-end space stock that not only provides consistent launch services, but also manufactures satellites, spacecraft components, and on-orbit management solutions -- all with the goal of streamlining the world's access to space. Today, Rocket Lab stands tall as one of only a few rocket launch providers (second only to privately held SpaceX) providing consistent launch services, with 39 successful launches of its reusable Electron orbital-class rocket.
Electron was designed for small- and medium-sized payloads up to 660 lbs (300 kg). But Rocket Lab also continues to make strides in its aggressive schedule to complete the development by 2024 of its next-gen Neutron rocket. This should also enable the company to begin offering human space flights along with larger payloads up to 33,000 lbs (15,000 kg).
To be clear, Rocket Lab is still very early in its long-term growth story, yet its results are relatively steady even in these early stages. Revenue in the second quarter climbed a modest 11.8% year over year, to just over $62 million -- a number dwarfed by the estimated $9 billion total addressable market this year for space launch services alone. That translates to a net loss of $37.4 million, or $0.08 per share, narrowed from a $0.10 per-share loss in the same year-ago period.
Both the top and bottom lines were roughly in line with Rocket Lab's latest guidance and Wall Street's expectations. The company completed three successful Electron missions during the quarter and signed 10 new launch agreements since Q1, and demand for its services shows no signs of slowing.
Shares are up around 75% year to date as of this writing. But as Rocket Lab continues to scale, marching toward profitability while expanding its reach with the introduction of Neutron next year, I believe there's plenty of room for this promising stock to continue soaring.
Image source: Getty Images.
A megacap AI play
Meanwhile, Amazon (AMZN 3.43%) doesn't exactly fit the early-stage meme stock mold endorsed by some of the more speculative investing subreddits. But the megacap tech stock is a perennial trending name on Reddit nonetheless.
Amazon stock soared last week after posting second-quarter 2023 results that trounced both its own guidance and Wall Street's expectations. The company enjoyed broad-based strength both in North America (where sales climbed 11% to $82.5 billion) and internationally (where sales rose 10% to $29.7 billion), while at the same time driving revenue from its Amazon Web Services (AWS) cloud-computing platform up 12% to $22.1 billion.
On the latter -- even amid concerns over slowing enterprise cloud spend -- Amazon CEO Andy Jassy noted that with the help of "a slew of generative AI [artificial intelligence] releases," growth at AWS has "stabilized as customers started shifting from cost optimization to new workload deployment."
Perhaps most impressive is the operating leverage Amazon enjoys as it grows at scale; quarterly operating income more than doubled on a year-over-year basis in Q2 to $7.7 billion, helping the company swing from a $0.20 per share loss incurred a year ago to net income of $6.7 billion, or $0.65 per share this quarter.
In any case, Amazon's results should be encouraging for the broader cloud-computing services market as it pertains to a positive shift in enterprise cloud spending trends. But I think investors who buy and hold Amazon shares for years will be pleasantly surprised by its ability to continue delivering outsized returns.
