Reddit: A Good Time To Buy The Sharp Dip (Rating Upgrade)

Gary Alexander
30.83K Followers
(12min)

Summary

  • Reddit's stock, down ~50% from its peak, is now a compelling buy, due to its strong user growth and diversified revenue streams.
  • Beyond general market volatility, Reddit stock fell because it reported a decline in U.S. users in Q4, which was driven by a Google search algorithm changed.
  • Management notes that this has happened periodically through Reddit's history, and that it has regained momentum in Q1.
  • Investors should consider buying Reddit ahead of its May 1 earnings, where positive U.S. user trends could trigger a stock rebound.
  • The stock is trading at a much more attractive 9.4x revenue multiple, only ~2 turns richer than Meta, despite a ~3x faster top-line growth rate expected for FY25.
Twitter and Its Alternatives Including Mastodon

hapabapa

When markets are this volatile, it's the exact perfect time to be an active investor. I continue to individually assess every stock in my portfolio, as valuations are gyrating wildly and each company's impact from tariffs and the slowing macroeconomy will be different.

This article was written by

30.83K Followers
With combined experience of covering technology companies on Wall Street and working in Silicon Valley, and serving as an outside adviser to several seed-round startups, Gary Alexander has exposure to many of the themes shaping the industry today. He has been a regular contributor on Seeking Alpha since 2017. He has been quoted in many web publications and his articles are syndicated to company pages in popular trading apps like Robinhood.

Analyst’s Disclosure: I/we have a beneficial long position in the shares of RDDT either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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