Two Relentless Expansion Shares to Consider for the 2025 Horizon and Beyond
In the realm of growth investments, two names that might not initially appear budget-friendly are Arm Holdings (ARM) and Reddit (RDDT). Despite their lofty prices, these companies are worth considering due to their unique advantages and promising futures.
Arm's technology has become as ubiquitous as it is unassuming. It powers a vast array of devices, from smartphones and IoT devices to smart TVs and advanced driver-assistance systems. Arm's business model differs from traditional chip manufacturers: instead of manufacturing chips, they license their architecture and building blocks to other companies. This strategic approach has fueled Arm's success, as evidenced by its stock price tripling since its 2023 IPO.
While the stock's high valuation introduces risks, Arm has compelling reasons to boost its earnings. The company is making strides in high-potential markets such as server CPUs and AI-enabled chips. Moreover, Arm is working on increasing its royalty rates, aiming to generate an additional $1 billion in annual revenue. This ambitious goal, when combined with its wide-reaching technology, allows Arm to maintain significant pricing power, ensuring its technology remains the heart of countless devices.
Meanwhile, Reddit has carved out a unique niche for itself as a valuable source of reliable information. When searching for useful product recommendations online, Reddit often serves as a trusted alternative to traditional search engines, which can be crowded with ads. As such, Reddit has the potential to be an advertiser's dream—though, like Arm, it still has work to do on the monetization front.
Reddit reeled in $348.4 million in revenue during the third quarter of 2024, representing a 68% year-over-year growth. Daily active unique users also climbed by 47%, and revenue per user increased by 14%. Despite these impressive figures, Reddit's $30+ billion valuation is still considered pricey. If the company can further grow its revenue per user while maintaining its appeal to users, it has the potential for significant earnings growth over the long term.
Both Arm and Reddit should be on every growth investor's radar. Their stocks are undeniably volatile, but their unique advantages are too compelling to ignore. Arm's technology has become an integral part of modern life, while Reddit has positioned itself as a trusted source of valuable information. As they continue to navigate their respective industries, their strategies and innovations will be unique narratives worth following.
Given that Arm's strategic approach to business has led to significant success and a tripling of its stock price since its 2023 IPO, investors might consider allocating a portion of their finance into Arm Holdings, recognizing that this investment could potentially yield high returns.
With Reddit's third-quarter revenue increasing by 68% year-over-year in 2024, and its daily active unique users and revenue per user also seeing substantial growth, investing in Reddit could be an opportunity to capitalize on its potential for long-term earnings growth, provided it continues to monetize its platform effectively.
