From Nasdaq: 2025-02-18 10:15:00

Reddit (RDDT) shares are overvalued with a Value Score of F. The forward 12-month Price/Sales ratio is 18.19, higher than its median and the Computer & Technology sector. RDDT has surged 261.2% in the past six months, outperforming the sector and the Internet – Software industry.

The surge in RDDT shares is due to strong user growth, improved advertising performance, and investments in AI tools. Reddit’s advertising business grew by 60% in Q4 2024. User engagement increased with daily active users reaching 101.7 million.

RDDT’s partnership with Alphabet boosts content discovery. Reddit’s AI-powered chatbot “Reddit Answers” provides curated summaries. The company is expanding into new verticals with collaborations like the one with Intercontinental Exchange for financial data products. Reddit’s Data API Terms remain unchanged for non-commercial usage.

For Q1 2025, RDDT expects revenues between $360-370 million with a Zacks Consensus Estimate of $372.59 million. The consensus loss per share is 4 cents, a decline of 113.79% year-over-year. Reddit aims to drive growth by expanding its advertising business and improving user experience.

Investors are advised to wait for a more favorable entry point for RDDT stock. Macroeconomic uncertainties, competition from other social media platforms, and stretched valuation are concerns. Reddit carries a Zacks Rank #3 (Hold). RDDT’s focus on advertising, international reach, and user experience enhancements are key growth strategies.



Read more at Nasdaq: Should You Buy, Sell or Hold Reddit Stock at P/S of 18.19X?