Why Reddit Stock Might Crush Meta and Snap in the Next Year

Move over, Zuck—Reddit's got the momentum. While Meta and Snap flounder in the ad-slump doldrums, Reddit’s cult-like communities and unfiltered chaos are turning it into a dark horse for 2025.

Here’s the kicker: Reddit’s revenue model—leaning into hyper-engaged niches—is bypassing the pitfalls of traditional social media. No algorithm-fed rage cycles, just raw user passion (and memes). Meanwhile, Meta’s metaverse bets still smell like burning cash, and Snap’s teen appeal is fading faster than a disappearing message.

Wall Street’s starting to notice. Reddit’s stock—once dismissed as a meme-stock sideshow—is quietly building institutional cred. The next 12 months could see it outflank its bloated rivals. Just don’t tell the finance bros—they’re still busy YOLO-ing into crypto.

The social media rock star of the moment

The excitement over Reddit across the past few days stems from its second-quarter earnings report, published Friday morning to a thunderously positive reception by the market (which sent the share price more than 21% skyward in morning trading alone).

Image source: Getty Images.

Revenue surged 78% higher on a year-over-year basis to $500 million, powered by all-important ad sales that rose 84% to $465 million. The bottom line according to generally accepted accounting principles (GAAP) flipped to a well-in-the-black profit of $89 million, against a $10 million deficit in the same quarter of 2024. Free cash FLOW (FCF) ballooned by $84 million across that stretch to $111 million. Both headline figures blew past analyst estimates.

As for operational metrics, the company's count for daily active uniques (DAUq) -- users that it defines as those "whom we can identify with a unique identifier who has visited a page on the Reddit website ... or opened a Reddit application at least once during a 24-hour period" -- leaped by 21% year over year to over 21 million souls. How's that for engagement?

Reddit's guidance for its current (third) quarter was similarly impressive. It's projecting $535 million to $545 million for revenue, and adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) of $185 million to $195 million. Analysts were anticipating a top line of barely over $473 million.

The right site at the right time

So, what's the secret sauce for Reddit?

Sure, management has launched several clever, growth-fueling initiatives, including dynamic product ads (DPA), rolled out in May. These spots match topics of the site's "subreddits," and embed within them to serve users who are obviously or apparently looking to buy such products/services. In the ideal case, the ads are doubly beneficial, as a shopper in need of guidance gets a tailored recommendation, and a theoretically ideal consumer is targeted by an advertiser.

Also in the realm of ads, Reddit is future-forward with its embrace of artificial intelligence (AI) tools for ad creation. With these, an advertiser can garner real-time information on trends in the discussion threads, plus integrate positive user comments into the ads themselves.

But I don't believe Reddit's big leaps are mostly due to these (admittedly impressive) technologies. Rather, I think it's more a function of what the company offers as a service. With the ability to generate meaningful discussion about almost anything and provide answers for a near-limitless variety of questions or concerns, Reddit is growing in both authority and utility.

As successful as Meta's Facebook and Instagram and Snap's offerings have been, they're not really venues for information swapping or edification. They're fun places to share things with friends and acquaintances. However, you WOULD be hard-pressed to quickly access an effective informational discussion on the history of the Habsburg Empire.

I think analysts tracking social media and big-tech stocks have cottoned on to this. They're modeling nearly 60% (!) annual growth for Reddit on the top line for full-year 2025, with a 31% boost in 2026. The collective estimate for per-share profitability is $1.86, a night-and-day improvement over a $3.33 loss in 2024. That should balloon by 61% (!!) in 2026.

Neither revenue nor profitability are expected to surge anywhere NEAR that high for Meta from 2025 to 2026. Analysts forecast Snap will improve its bottom line by 42% across that stretch, but with revenue growth of 11%.

High performance attracts investors, of course, so Reddit's valuations are comparatively much higher than its social media cousins (a dizzying 121 forward price-to-earnings ratio, for example, against Snap's under 37, and Meta's sub-29). Yet this company has clearly captured the zeitgeist and possesses the user stickiness, the resources, and the managerial acumen to keep up those massive growth rates.

Of that trio, then, I would unhesitatingly buy Reddit stock.