Avoid SpaceX and Buy These 11 Stocks Instead

SpaceX finally went public and Wall Street couldn’t stop talking about it. Elon Musk was behind it. Space exploration was the pitch. Everyone expected another huge rally. Long-term investors warned it was too much, too soon.

They called it right. The stock lost most of its early gains. Billions in market value gone in weeks. Some investors still think it bounces back. But the real question hasn’t changed: is this a stock worth holding for years, or is there better value somewhere else.

On Reddit and other value investing communities, there’s been growing pushback. Some users who usually avoid hype stocks argue this looks stretched, and recent price action seems to back that up. The stock has dropped around 25% from its recent highs, cooling off the early IPO hype. Bears point to the fact that profitability may be years away, and also highlight upcoming insider lockup expiries as another risk factor. Even so, some long-term investors argue there are simpler opportunities elsewhere—more established companies with steady earnings and stronger balance sheets, where the outlook is easier to read.

For this article, we scanned several value-focused subreddits and investing communities on Reddit where retail investors share detailed DDs and research write-ups. There are thousands of threads where users argue SpaceX should be avoided and instead highlight stronger stocks with real catalysts. We picked 11 stocks that were most commonly mentioned by users and explained the reasons for being bullish. With each stock we have also mentioned its hedge fund sentiment.

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Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Insider Monkey’s quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 599.2% since May 2014, beating its benchmark by 372 percentage points (see more details here).

11. AST SpaceMobile (NASDAQ:ASTS) 

Number of Hedge Fund Investors: 39

Redditors say that for those interested in space, consider AST SpaceMobile (NASDAQ:ASTS) instead of chasing SpaceX hype. AST SpaceMobile is developing the world’s first space cellular broadband network in Low Earth Orbit. It sells this service directly to standard smartphones without hardware upgrades. It’s a leading satellite operator building actual infrastructure, not just pursuing venture dreams. The company has made BlueBird satellites, which are the largest commercial satellites in orbit. AST has received Federal Communications Commission approval to deploy and operate a 248-satellite constellation and perform direct-to-cell operations.

The key differentiator is that AST SpaceMobile (NASDAQ:ASTS) is not competing with carriers. It’s enabling carriers to expand coverage into areas where building cell tower infrastructure is economically unfeasible. These areas include remote highways, national parks, mining sites, offshore energy assets, disaster zones, and rural farms. AST has agreements with 60 mobile network operators that collectively cover more than 3 billion subscribers globally. Major carriers like AT&T, Verizon, and Vodafone are already on board.

Crossroads Capital stated the following regarding AST SpaceMobile, Inc. (NASDAQ:ASTS) in its Q1 2026 investor letter:

“AST SpaceMobile, Inc. (NASDAQ:ASTS): Q1 picked up exactly where Q4 left off. The company’s transition from R&D-stage startup to operational scaleup, which we described last quarter, went from “underway” to “unmistakable” over the course of the last three months. There was one setback, as BB7 was placed in the wrong orbit by the New Glenn 3 rocket, sparking a downturn that had everything to do with Blue Origin’s vehicle misplacement, not any failure of AST’s technology. Nonetheless, the setback served as a healthy reminder that navigating the space frontier is never without challenges, particularly for a mission of this scale.

The company’s early March earnings update showed full-year 2025 revenue came in at $70.9M, at the top end of the guided range, driven by 15 commercial gateway deliveries across nine MNO customers on five continents and milestones against ten active government contracts. 2026 revenue guidance is $150–200M, at least a doubling, and management gave clarity and context to the $1.2B of contracted backlog and government-related scaling we should see into next year. Q1 2026 revenue of $14.7M was light relative to consensus, but guidance was reaffirmed and management noted revenue will be heavily weighted toward the second half of the year as launches begin and commercial service activates…” (Click here to read the full text)

10. Rocket Lab (NASDAQ:RKLB) 

Number of Hedge Fund Investors: 43

Before SpaceX IPO’d, Rocket Lab (NASDAQ:RKLB) was one of the top space infrastructure plays. But when SpaceX went public at a $2 trillion valuation, investors said, “Why buy the proxy when I can own the real thing? The stock is down about 30% over the past month. But Redditors believe the business fundamentals didn’t get worse. The company still has all its contracts, all its backlog, and all its growth prospects. The selloff was pure capital reallocation, not deteriorating business performance.

Rocket Lab (NASDAQ:RKLB) operates multiple rocket systems. Their main workhorse is the Electron rocket, which launches small payloads into orbit. Clients include government agencies, defense contractors, and commercial satellite operators who need to get their satellites into space.

Neutron is Rocket Lab’s (NASDAQ:RKLB) next-generation mega rocket, which is under development. Management expects Neutron to launch sometime in 2027. But here’s why investors care: each Neutron launch is expected to generate $50 to $55 million in revenue. That’s massive compared to what Electron brings in. If Rocket Lab can launch Neutron 20 times per year, that’s $1.0 to $1.1 billion annually, just from Neutron. That’s almost double their entire 2025 revenue projection of $602 million.

Polen 5Perspectives Small Mid Growth Strategy stated the following regarding Rocket Lab Corporation (NASDAQ:RKLB) in its fourth quarter 2025 investor letter:

“Rocket Lab Corporation (NASDAQ:RKLB) is an end-to-end space company which engages in the development of rocket launch and control systems for the space and defense industries. The company operates in two primary segments: Launch Services and Space Systems. Launch Services provides rides into orbit for small satellites with their Electron rocket. Space Systems designs and manufactures spacecraft components, satellite buses, and offers mission operations and other space solutions. The stock was up nearly 50% in the quarter on a strong set of earnings results and a growing backlog. While we initiated a position later in the quarter, the lack of exposure for the better part of the period meant the stock represented a detractor to relative performance.”

9. SoFi (NASDAQ:SOFI)

Number of Hedge Fund Investors: 47

SoFi (NASDAQ:SOFI) is a fintech bank that offers personal loans, student loan refinancing, and financial services. It sells checking accounts, investment accounts, credit cards, crypto, and subscription services to its members. Its customers are mostly people refinancing expensive credit card debt into cheaper personal loans. The moat is the network effect of having 14.7 million members locked in, and the ability to upsell them more products over time.

The stock is down 34 percent this year because of how SoFi accounts for loans. When SoFi (NASDAQ:SOFI) originates a loan, it doesn’t wait to collect interest payments over time. Instead, it records all the future interest it will earn from that loan on day one. So if you borrow $100,000 and will pay $30,000 in interest over five years, SoFi counts that $30,000 as profit immediately. It’s not cash. It’s an estimate of cash that will come later. The market worries that if borrowers default, those estimates were wrong and the earnings evaporate. That’s why the stock got crushed.

But here’s the bull case. The core business is getting stronger, not weaker. Deposits have grown 2.2x in just over two years. That’s cheap funding. The company is no longer dependent on expensive market debt, which has fallen 64 percent. Customers are buying more products per account. The upselling rate is accelerating. Revenue is growing 41 percent year over year. The company is profitable with ten consecutive quarters of GAAP profits. Operating leverage is kicking in as expenses grow slower than revenue.

The biggest growth catalyst is the massive installed base of members who haven’t been monetized yet. SoFi (NASDAQ:SOFI) has 14.7 million members but many only use the free checking account. Those members represent a pipeline of growth the company can upsell without spending more on marketing. The acquisition cost is already paid. Upselling them to lending products, investment accounts, or the $10-per-month subscription is nearly free to execute.

A second catalyst is the Loan Platform Business, where SoFi originates loans for third parties and collects fees without holding the risk. That business grew from $268 million annualized run-rate to $775 million in less than a year. It’s capital-light and doesn’t require deposits to fund.

Polen 5Perspectives Small-Mid Growth Strategy stated the following regarding SoFi Technologies, Inc. (NASDAQ:SOFI) in its Q1 2026 investor letter:

“The most significant detractors from the Portfolio’s relative performance in the quarter were SoFi Technologies, Inc. (NASDAQ:SOFI), Figure Technology Solutions , and Affirm Holdings . SoFi Technologies started its life in 2011 as a student loan refinancer and has rapidly evolved into a full-service digital banking platform. Its integrated ecosystem is designed to provide a one-stop solution for consumers, while leveraging technology to drive efficiency and cross-sell opportunities. Shares underperformed as investor sentiment toward consumer lending and fintech remained pressured amid interest rate volatility and macro uncertainty. Concerns around loan growth, funding costs, and credit performance weighed on the group more broadly. While SoFi continues to demonstrate solid member and product growth, the market has taken a more cautious view on near-term earnings trajectory.”

8. Arista Networks (NYSE:ANET)

Number of Hedge Fund Investors: 85

Arista Networks (NYSE:ANET) is a key beneficiary of the AI revolution because it makes the connectivity backbone that ties together AI infrastructure in data centers. The company is investing heavily in R&D to stay ahead. R&D spending jumped 29 percent in the most recent quarter to $343 million.

The stock trades at a 43x to 45x forward P/E. That’s a 72 percent premium to the sector median at 25x. But the numbers justify it. Over the past year, revenue growth sits at 31 percent versus peers at 11 percent. For FY2025, the company posted 28.6 percent YoY growth. Management just guided to 27.7 percent YoY growth for FY2026. Over the past five years, revenue compound annual growth rate was 31.2 percent. Over the past ten years, it was 26.8 percent.

EPS growth over the past year is 23 percent compared to peers at 17 percent. Looking forward, consensus estimates call for 22.1 percent EPS CAGR through FY2028. The company’s historical five-year EPS CAGR was 39.5 percent and the ten-year CAGR was 34.6 percent.

Arista Networks (NYSE:ANET) benefits from these AI tailwinds because it supplies the connectivity backbone that ties together all the hardware in data centers. Here’s how it works.

The global cloud computing market was valued at $944 billion in 2025 and is projected to reach $3.3 trillion by 2033, a 16 percent CAGR. The data center market stands at $300 billion in 2026 and could reach $700 billion by 2034, an 11 percent CAGR. The global AI market is expected to become a $3.5 trillion market by 2033, a 31 percent CAGR.

But the key is how Arista Networks (NYSE:ANET) specifically wins from this. As data centers build out to handle AI workloads, they’re changing how they connect hardware. The ratio of CPUs to GPUs in data centers is shifting from 1:8 during the training phase to 1:4 during the inference phase, heading toward parity. That means you need more networking to connect all these chips together. Arista makes the ethernet and interconnect solutions that tie GPUs, CPUs, and the underlying infrastructure together. More GPUs and CPUs means more pipes needed. That’s Arista Networks’ (NYSE:ANET) market.

McKinsey expects inference to become the dominant workload in AI data centers, representing more than 50 percent of all AI compute and roughly 30 to 40 percent of total data center demand. More inference workloads mean more networks needed to connect concurrent swarms of real-time inference.

7. Mercado Libre (NASDAQ:MELI)

Number of Hedge Fund Investors: 102

Mercado Libre (NASDAQ:MELI) stock tanked 17 percent this year. Reddit’s been all over it, saying this is the real play instead of buying into the SpaceX IPO craze. The company owns the biggest marketplace and payment system across Latin America. They’ve got Brazil, Mexico, and a bunch of other countries locked down.

The stock looks expensive at first glance with a PE of 28x to 40x. But the growth doesn’t match that valuation. The price-to-growth ratio is 1.25 while the sector average is 1.40. So it’s actually trading cheaper than its peers relative to how fast it’s growing.

Q1 2026 was solid. Revenue grew 49 percent year-over-year. Brazil was crushing it with 54 percent growth. They hit 84 million active users on the marketplace up 26 percent. The payment side had 82.9 million monthly users, up 29 percent. Assets under management hit almost $20 billion, up from $11 billion a year ago.

But Mercado Libre’s (NASDAQ:MELI) profitability fell in Q1 amid huge investments in Brazil and rising oil prices due to the Middle East conflict. But bulls say the company has secular growth catalysts for the long term. Digital payments market was $114 billion in 2024 and hits $361 billion by 2030. That’s a 21% CAGR. E-commerce in Latin America gets to $261 billion by 2028. If they get margins back to 10-12% like before, the stock could hit $2,691 a share. That’s 61% up from June 2026.

Bell Global Equities Fund stated the following regarding MercadoLibre, Inc. (NASDAQ:MELI) in its Q1 2026 investor letter:

“A holding was also established in MercadoLibre, Inc. (NASDAQ:MELI), the “Amazon of Latin America”. MercadoLibre is a vast enterprise, shipping over US$85bn (3bn items) worth of goods each year to over 120 million customers. Both volumes and revenues have increased tenfold over the past six years, while the income statement and cash flow inflected into sustained profitability. We have long admired this company and its excellent founder-led management team, but the shares only occasionally provide an opportune window to enter a position. We had watched its success attract renewed competition last year and anticipated margins to come under pressure. With margin forecasts now reset to appropriate levels, we used the recent share price weakness to begin a position in a company where we forecast earnings will more than triple in the five years ahead.”

6. Reddit (NYSE:RDDT)

Number of Hedge Fund Investors: 70

Reddit (NYSE:RDDT) stock has real long-term growth catalysts that most investors are missing. The company is not just a social media platform anymore. It’s become a data goldmine. Millions of users share genuine personal takes and stories on Reddit every single day. That’s exactly what AI companies need and are willing to pay big money for.

In Q1 2026, Reddit (NYSE:RDDT) revenue jumped 69% year over year. Advertising revenue grew even faster at 74%, while daily active users reached 126.8 million, up 17%. This is serious growth across the board.

The AI licensing deals are where the real money shows up. Google signed a $60 million per year deal with Reddit. OpenAI signed around $70 million per year. Both companies get access to Reddit’s real-time data API to train their AI models and improve their answers. Total licensing value is over $200 million per year. Both deals renew in 2027, which is a major catalyst. As AI labs compete for high-quality human discussion data, Reddit’s negotiating power increases. The company is pushing for dynamic pricing instead of flat fees because every variable has changed since those original deals were signed.

Reddit (NYSE:RDDT) is monetizing smartly, too. Average revenue per user sits at $5.23 globally. In the US, ARPU hit $9.63. That already beats Pinterest at $7.12 and Snapchat at $9.23. The only player ahead is Meta at $15.66, and Reddit can keep climbing toward that without reaching it. There’s still room to add more ad frequency, improve targeting, and monetize search and video features that barely make money yet.

The data scarcity problem for AI is real. High-quality training data ran out about a year ago. Reddit generates the equivalent of all of Wikipedia’s content every single month. Twitter shut down its free API. Stack Overflow partnered with Google. Reddit is one of the few scalable sources of organic human discussion left. AI companies have no choice but to pay up.

Carillon Eagle Mid Cap Growth Fund stated the following regarding Reddit, Inc. (NYSE:RDDT) in its Q1 2026 investor letter:

“Reddit, Inc. (NYSE:RDDT) is an online community platform where users share, discuss, and engage with content across a wide range of topics. The company posted solid revenue growth and profitability, while the closely watched metric of logged-in user growth was somewhat disappointing. Additional uncertainty around upcoming large language model (LLM) data-licensing renewals also pressured sentiment. The company authorized a stock buyback and provides an appealing audience for advertisers, as roughly half of its users are not active on other social media platforms.”

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