Reddit, Inc. operates a website that organizes digital communities. It organizes communities based on specific interests that enable users to engage in conversations by sharing experiences, submitting links, uploading images and videos, and replying to one another. The company was founded in 2005 and is headquartered in San Francisco, California.

Reddit, Inc.

Below is Validea's guru fundamental report for REDDIT INC (RDDT). Of the 22 guru strategies we follow, RDDT rates highest using our P/B Growth Investor model based on the published strategy of Partha Mohanram. This growth model looks for low book-to-market stocks that exhibit characteristics associated with sustained future growth.
REDDIT INC (RDDT) is a large-cap growth stock in the Business Services industry. The rating using this strategy is 77% based on the firm’s underlying fundamentals and the stock’s valuation. A score of 80% or above typically indicates that the strategy has some interest in the stock and a score above 90% typically indicates strong interest.
The following table summarizes whether the stock meets each of this strategy's tests. Not all criteria in the below table receive equal weighting or are independent, but the table provides a brief overview of the strong and weak points of the security in the context of the strategy's criteria.
Detailed Analysis of REDDIT INC
More Information on Partha Mohanram
About Partha Mohanram: Sometimes the best investing strategies don't come from the world of investing. Sometimes research that changes the investing world can come from the halls of academia. Partha Mohanram is a great example of this. While academic research has shown that value investing works over time, it has found the opposite for growth investing. Mohanram turned that research on its head by developing a growth model that produced significant market outperformance. His research paper "Separating Winners from Losers among Low Book-to-Market Stocks using Financial Statement Analysis" looked at the criteria that can be used to separate growth stocks that continue their upward trajectory from those that don't. Mohanram is currently the John H. Watson Chair in Value Investing at the University of Toronto and was previously an Associate Professor at the Columbia Business School.
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About Validea: Validea is aninvestment researchservice that follows the published strategies of investment legends. Validea offers both stock analysis and model portfolios based on gurus who have outperformed the market over the long-term, including Warren Buffett, Benjamin Graham, Peter Lynch and Martin Zweig. For more information about Validea, click here
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

RDDT Quantitative Stock Analysis

Guru Fundamental Report for RDDT

Key Points
Just a year after its initial public offering, Reddit is already turning a profit.
Pool Corp.'s repair business will maintain its revenue stream even when people aren't installing pools.
Not every stock is a winner all the time -- and that's OK. If you're a buy-and-hold investor like me, you understand that every stock and every market has a down patch sometimes. The overall stock market experiences a bear market every 3.5 years or so, but that doesn't keep the market from gaining on average around 10% per year.
However, when a stock is sagging, that can be the best time to buy. I'm not suggesting you try to catch a falling knife and invest in a company that's crumbling, but there are times where a company falters through no fault of its own -- for instance, temporary market conditions or early growing pains. During the COVID-19 pandemic's height, I loaded up on Delta Air Lines and Royal Caribbean Cruises because I knew they would be back -- and I ended up making a sizable profit after holding each for two years.
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So, it can pay off to look at today's investing also-rans and find some companies that are on sale for a serious discount. Two of them that I highly recommend are Reddit (NYSE: RDDT) and Pool Corporation (NASDAQ: POOL).
Let's take a look at both.
Reddit: Down 11% YTD
Reddit's been around for 20 years, but it just became a publicly traded company last year. The social media company is different from others because its users are largely anonymous. It has a highly structured system of communities, called subreddits, where users can discuss specific topics.
The company says it has an audience of 400 million people who visit or log on each week, with 108.1 million daily active unique users -- a measure that was up 31% on a year-over-year basis in the first quarter. Revenue for the quarter jumped 61% to $392.4 billion, and advertising revenue was up to $358.6 million.
The company also turned a profit, recording net income of $26.5 million versus a loss of $575.1 million in the same quarter a year ago.
I think those numbers are solid. Reddit stock is also up 325% from its IPO price of $34. But if you look at Reddit on a year-to-date (YTD) basis, you see the stock down 11%.
Is that a huge issue for Reddit? Not at all. Remember, this is a company that's just getting started and just starting to turn a profit. It's learning how to monetize its user base, sell advertising, and generate consistent earnings. That takes time, so I'm not surprised at all that Reddit pulled back from its all-time high set in February.
I'll give you an example. Another social media company, Facebook, went public in May 2012. It dropped 31% in its first year before turning around to begin steady growth. Today, now known as Meta Platforms (NASDAQ: META), the company has the sixth-greatest market capitalization in the world, with a valuation of $1.7 trillion.
I'm not suggesting that Reddit will be the next Meta. But I will say that the stock is on sale right now, and it should be an excellent investment for the next decade.
Pool Corporation: Down 8% YTD
Pool Corporation is a distributor and seller of outdoor equipment that's best known for selling and installing swimming pools, and for its sales of replacement parts to both individuals and distributors.
Not surprisingly, this is a tough business to be in right now. Installing a new swimming pool can cost tens of thousands of dollars, and the U.S. economy has been volatile for several months. Inflation, tariff threats, and supply chain challenges make investing in a new swimming pool a leap of faith that some people aren't willing to take right now.
But remember, Pool Corp. isn't just an installation company. It's currently getting 64% of its revenue from maintenance and repair services, with only 14% coming from new construction and 22% from making renovations. That means Pool still has a solid business, even when the economy is finicky. Revenue in Q1 2025 was $1.07 billion, down from $1.12 billion a year ago. Profits also took a hit, dropping from $78.8 million to $53.5 million.
However, even in these times Pool is turning profit, with Q1 earnings per share of $1.42 (down from $2.05). Pool also pays a solid dividend of $1.20 per share (up $0.10 from a year ago), with a dividend yield of 1.7%.
The economy won't be like this forever, and when it bounces back and people start building pools again, Pool Corp.'s profits could go through the roof. Down 8% on a YTD basis, Pool Corp. seems positioned for long-term gains if you're a patient investor.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

2 Stocks to Buy on the Dip and Hold for 10 Years

RDDT Factor-Based Stock Analysis

Among the underlying components of the Russell 3000 index, we saw noteworthy options trading volume today in Tenet Healthcare Corp. (Symbol: THC), where a total of 11,993 contracts have traded so far, representing approximately 1.2 million underlying shares. That amounts to about 87.8% of THC's average daily trading volume over the past month of 1.4 million shares. Especially high volume was seen for the $180 strike call option expiring August 15, 2025, with 3,539 contracts trading so far today, representing approximately 353,900 underlying shares of THC. Below is a chart showing THC's trailing twelve month trading history, with the $180 strike highlighted in orange:
Navitas Semiconductor Corp (Symbol: NVTS) options are showing a volume of 214,911 contracts thus far today. That number of contracts represents approximately 21.5 million underlying shares, working out to a sizeable 85.1% of NVTS's average daily trading volume over the past month, of 25.3 million shares. Particularly high volume was seen for the $10 strike call option expiring August 22, 2025, with 23,509 contracts trading so far today, representing approximately 2.4 million underlying shares of NVTS. Below is a chart showing NVTS's trailing twelve month trading history, with the $10 strike highlighted in orange:
And Reddit Inc (Symbol: RDDT) saw options trading volume of 57,069 contracts, representing approximately 5.7 million underlying shares or approximately 81.2% of RDDT's average daily trading volume over the past month, of 7.0 million shares. Especially high volume was seen for the $150 strike call option expiring July 25, 2025, with 4,380 contracts trading so far today, representing approximately 438,000 underlying shares of RDDT. Below is a chart showing RDDT's trailing twelve month trading history, with the $150 strike highlighted in orange:
For the various different available expirations for THC options, NVTS options, or RDDT options, visit StockOptionsChannel.com.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Notable Monday Option Activity: THC, NVTS, RDDT

Reddit RDDT operates a community-driven social media platform with more than 100,000 active subreddits, generating over 90% of its revenue through digital advertising. RDDT reported first-quarter revenues of $392 million, marking 61% year-over-year growth. However, Reddit continues to face pressure in a highly competitive advertising space, where scale, automation and platform maturity play a significant role in attracting ad dollars.
RDDT shares have declined 10.3% year to date attributed to rising competitive pressure and a challenging macroeconomic environment following U.S. President Donald Trump's decision to levy tariffs on trading partners. Higher tariffs is expected to hurt discretionary spending negatively impacting ad spending. The stock has underperformed both the broader Zacks Computer & Technology sector and the Zacks Internet Software industry, which have appreciated 7.5% and 14%, respectively, over the same period.
RDDT YTD Performance
Image Source: Zacks Investment Research
RDDT Faces Stiff Competition
Reddit operates within an increasingly competitive digital advertising environment dominated by established technology platforms. Meta Platforms META and Alphabet GOOGL control substantial portions of the global digital advertising market, possessing sophisticated advertising infrastructure and extensive advertiser relationships that Reddit cannot easily match.
Meta Platforms continues to expand its advertising capabilities across Facebook, Instagram and WhatsApp through enhanced cross-platform integration. The company's Ads Manager enables businesses to manage marketing strategy across all platforms, with AI systems optimizing advertising budgets across placements. Meta Platforms plans to introduce Business AI for personalized product recommendations and advanced WhatsApp business messaging features.
Alphabet dominates search advertising while strengthening its market position through AI-powered advertising solutions. The company's AI Overview and Circle to Search features enhance user engagement, making its advertising inventory more valuable to marketers. Reddit's advertising technology remains less sophisticated than Meta Platforms and Alphabet, with limited measurement tools and targeting options, potentially affecting its ability to compete for advertiser budgets.
Reddit Shares Overvalued
Reddit shares are overvalued, as suggested by the Value Score of F.
In terms of forward 12-month P/S, RDDT stock is trading at 12.67X compared with the Zacks Internet - Software industry’s 5.71X. The stock is expensive than competitors, including Meta Platforms and Alphabet.
Shares of META and GOOGL are currently trading at P/S ratios of 9.1 and 6.36, respectively.
RDDT Valuation (Chart)
Image Source: Zacks Investment Research
Reddit Earnings Estimates Remain Stable
For 2025, the Zacks Consensus Estimate for revenues is pegged at $1.85 billion, indicating year-over-year growth of 42.07%.
Reddit Inc. Price and Consensus
The consensus mark for Reddit’s 2025 earnings is pegged at $1.21 per share, unchanged over the past 30 days. The figure marks an improvement over 2024’s loss of $3.33 per share.
Can Portfolio Expansion and User Growth Aid Prospects?
Reddit has continued expanding its platform to support advertiser adoption and user activity. Reddit Answers, an AI-powered search tool, reached one million weekly users in the first quarter and launched in Australia and the U.K., with plans for deeper integration into core search. Dynamic Product Ads received updates aimed at onboarding larger product catalogs and improving machine learning models. Reddit Pro usage has more than doubled, supported by integration with Google Tag Manager to streamline tracking and support campaign-level attribution.
In May 2025, Reddit introduced Reddit Community Intelligence, a tool that analyzes real-time discussions to generate marketing insights across categories like gaming and tech. Other updates included AI-powered feed ranking and guided contribution flows to encourage user participation. These changes are part of ongoing efforts to modify user experience and expand advertiser-facing tools.
Improving engagement has been driving user growth for RDDT. Daily Active and Weekly Active Uniques both increased 31% year over year and reached 108.1 million and 401 million, respectively, in the reported quarter. The Zacks Consensus Estimate for Daily Active and Weekly Active Uniques is pegged at 110.15 million and 407.56 million, respectively, for the second quarter.
Conclusion: Avoid Reddit Stock for Now
Reddit's growing product suite, building user engagement and strong partner ecosystem offer long-term promise. The platform's AI-powered tools and expanding international reach demonstrate potential for sustainable growth in the evolving digital advertising landscape.
However, given RDDT's premium valuations, intensifying competition and broader market uncertainties, near-term gains may be limited. The company's current trading multiples exceed industry standards while facing formidable competitors with superior resources and infrastructure. Combined with macroeconomic headwinds and the stock's recent underperformance, these factors create a cautious environment, which may limit near-term upside.
Reddit currently carries a Zacks Rank #4 (Sell), suggesting that investors should avoid the stock at current levels.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Reddit Facing Challenges in Ad Market: Hold or Fold the Stock?

Both Meta Platforms META and Reddit RDDT are major players in the social media domain. Meta Platforms owns Facebook, Instagram and WhatsApp, serving over 3.4 billion daily userswhile Reddit focuses on community discussions with 108.1 million daily users.Both the stocks generate majority of their revenues from advertising.
Per a report by The Business Research Company, the global social media advertising market is expected to grow from $228.18 billion in 2024 to $406.64 billion in 2029, indicating a CAGR of 12.25%. Both companies are heavily investing in AI to enhance their respective advertising capabilities and user experiences. Meta Platforms has deployed AI across its recommendation systems and launched Meta AI with nearly a billion monthly users, while Reddit has integrated AI-powered search through Reddit Answers and improved content recommendation systems.
However, META or RDDT, which has an edge right now?
Let's delve deepto find out.
The Case for RDDT
Reddit is benefiting from strong growth in user engagement, including rising daily and weekly active users, ARPU gains and expanding advertiser tools like DPA, Reddit Pixel and CAPI. Reddit’s AI-powered features, including Reddit Answers, are key catalysts in enhancing content discovery and personalization. Reddit Answers has more than one million weekly users. Reddit aims to deepen advertiser onboarding and improve campaign outcomes through integrations with Smartly.io and Meta Platforms’ campaign import tool.
Reddit expects revenues between $410 million and $430 million for the second quarter of 2025, indicating 46-53% year-over-year growth. AI-led product development is improving platform experience and scale. The company hosts a data trove that becomes the foundation of large language model training. Reddit’s platform has more than 100,000 active subreddits, with over 500 subreddits that each have at least one million subscribers. Investments in AI have improved new user onboarding and driven engagement with existing users. Internally developed models are powering feed ranking, onboarding, translation and moderation.
Reddit's growth appears less stable despite recent strong performances. While the company reported its third straight quarter of more than 60% revenue growth in first-quarter 2025, several concerns limit its prospects. The platform depends heavily on Google search traffic for new users, making it vulnerable to changes in search algorithms that Reddit cannot control. The platform's community-based model, while unique, makes it harder to grow quickly compared to automated content systems
Reddit's subscription services and tools for content creators remain underdeveloped, limiting ways to diversify revenue. The company's advertising technology is less advanced than Meta Platforms and Google, which may hurt its ability to keep advertisers and run effective campaigns in the competitive digital advertising market.
The Case for META
Meta Platforms continues to show strong performance across its ecosystem, supported by deep AI integration and a broad user base. Upgrades to its recommendation systems have led to a 7% increase in time spent on Facebook and 6% on Instagram over the past six months. Meta AI now reaches nearly one billion monthly users, underscoring the platform’s ability to scale new experiences across products.
The advertising business remains the core revenue engine. AI-powered improvements have boosted conversion rates by 5% in Facebook Reels. More advertisers are adopting Meta’s creative tools, making campaign development faster and more accessible. WhatsApp’s push into business messaging, especially in emerging markets, is expected to open additional revenue streams.
The company recently announced features to the Ads Manager that enable businesses to manage their marketing strategy across WhatsApp, Facebook and Instagram. Businesses can now upload their subscriber list and either manually select marketing messages as an additional placement or use Advantage+. META’s AI system will then optimize budgets across placements to maximize performance. Ads Manager will help businesses in creating ads in Status once the feature is available.
Meta Platforms is planning to introduce Business AI that can make personalized product recommendations and facilitate sales on any business’ website. Over a WhatsApp chat, the Business AI can also follow up with customers to answer questions and provide updates. Moreover, Meta Platforms plans to launch calling and voice options for large businesses that use the WhatsApp Business Platform, thereby strengthening the relationship between businesses and customers.
Price Performance and Valuation of RDDT and META
Shares of Reddit have plunged 8.6% year to date and have underperformed the appreciation in Meta Platforms shares which were up 24% over the same period.
RDDT and META Performance
Image Source: Zacks Investment Research
Both Meta Platforms and Reddit are overvalued, as suggested by the Value Score of D and F, respectively.
In terms of forward 12-month Price/Sales, Meta Platforms shares are trading at 9.06X, lower than Reddit’s 12.62X.
RDDT and META Valuation
Image Source: Zacks Investment Research
META’s Earnings Estimate Revision Positive, RDDT’s Steady
The Zacks Consensus Estimate for Reddit’s 2025 earnings is pegged at $1.21 per share, unchanged over the past 30days. The figure marks an improvement over 2024’s loss of $3.33 per share.
Reddit Inc. Price and Consensus
The Consensus mark for META’s 2025 earnings is pegged at $25.35 per share, up by 3 cents over the past 30 days, indicating a 6.24% increase over 2024’s reported figure.
Meta Platforms, Inc. Price and Consensus
Conclusion
Meta Platforms offers better growth potential through its diverse business model, proven AI implementation and multiple revenue sources, including advertising improvements and business messaging. The company's financial strength, operational skills and ability to use its large user base for new products provide lasting competitive advantages. While Reddit has unique appeal, its limited money-making ability and execution challenges present significant risks.
Currently, Meta Platforms with a Zacks Rank #3 (Hold), has an edge over Reddit, which has a Zacks Rank #4 (Sell).
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