Core Viewpoint - Reddit (NYSE: RDDT) is being initiated with a buy recommendation following a 46% pullback due to a miss in 4Q user growth despite beating EPS and revenue expectations [1] Summary by Relevant Sections - **User Growth Performance** - Reddit experienced a 39% year-over-year increase in global daily active uniques, but this was below expectations, leading to concerns about user growth [1] - **Financial Performance** - The company reported better-than-expected earnings per share (EPS) and revenue figures, indicating strong financial health despite the user growth miss [1] - **Market Context** - The analysis comes from a retired Wall Street portfolio manager with over two decades of experience in the technology, media, and telecommunications (TMT) sector, emphasizing a focus on momentum in investment strategies [1]

Core Viewpoint - Reddit Inc. has experienced a significant stock decline of 36% since its fourth-quarter earnings report, despite beating earnings and revenue expectations, primarily due to disappointing user growth attributed to changes in Google's search algorithm [1][2]. Financial Performance - Reddit reported a year-over-year revenue growth of 71% in Q4, marking the fastest growth since 2022 [6]. - The stock is currently trading at $121, down 25% year-to-date, but has seen a 159% increase over the past year [5]. Market Conditions - Broader market volatility has contributed to Reddit's stock decline, with the Nasdaq Composite experiencing a 4% drop on March 10, 2023, amid recession fears and trade uncertainties [3]. Analyst Sentiment - Loop Capital maintains a 'Buy' rating on Reddit with a price target of $210, indicating a 73% upside potential from current levels [6]. - Analysts view the recent sell-off as excessive, highlighting Reddit's strong fundamentals and growth potential [6]. Growth Drivers - Analysts expect Reddit's advertising expansion to drive future growth, with higher average revenue per user (ARPU) anticipated from enhanced ad tools and broader placements [7]. - Auction-based pricing is projected to attract more advertisers, contributing to revenue growth of 36% and an 87% increase in EBITDA this year [8].

Core Viewpoint - Reddit stock has experienced significant volatility, dropping 38% recently, but is now considered a potential buying opportunity due to its current valuation and growth prospects [5][6][11]. Company Performance - Reddit reported a 71% year-over-year revenue increase to $427.7 million, with daily users up 39% to 102 million and weekly users up 42% to 379 million [10]. - Earnings per share were $0.36, exceeding expectations, and free cash flow turned positive at $89 million [10]. Growth Projections - Analysts forecast a 50% sales growth for Q1 2025, with full-year revenue growth expected to be around 39% [6]. - Loop Capital predicts a slower revenue growth of 36% for the year but still rates Reddit stock as a buy, valuing it at $210 per share, which is 61% above its recent closing price of $130 [11][12]. Financial Metrics - Reddit is currently valued at $23 billion, or $20.4 billion net of cash, trading at 94 times its trailing free cash flow of $216 million [12]. - Free cash flow is projected to grow to $523 million this year, representing a 142% increase over 2024, indicating that Reddit's free cash flow is growing four times faster than sales [13]. Strategic Initiatives - Reddit is implementing new tools to enhance user engagement and improve advertising capabilities, which could drive higher revenue per user [7][8]. - The company is focusing on mitigating risks associated with potential revenue slowdowns due to changes in search engine rankings [6]. Market Context - The broader market has been affected by tariff-related concerns, but Reddit's business model appears largely insulated from these issues, making it a unique opportunity in the current environment [9].

Core Viewpoint - Reddit's stock has shown volatility, with a recent uptick of over 10% following a significant drop, indicating potential recovery amidst broader market concerns [1][2]. Group 1: Stock Performance - Reddit shares rose more than 10% on Tuesday, reversing a three-day slump, but remain approximately 30% below their previous close [1]. - The company's shares dropped over 15% in February due to weaker-than-expected fourth-quarter user numbers, which were impacted by a Google search algorithm change [2]. - Reddit's shares have been affected by broader market trends, with major tech companies losing over $750 billion in market value recently [3]. Group 2: Analyst Insights - A Loop Capital analyst note characterized Reddit's shares as "extremely attractive" and suggested that the recent 50% drop was excessive, highlighting the company's significant upside potential [2]. - Loop Capital managing director Alan Gould noted that despite a "risk-off market environment," Reddit has been one of the top-performing stocks over the past year, aside from its recent dip [4]. Group 3: Financial Performance - Reddit's fourth-quarter sales grew 71% year-over-year to $428 million, marking the fastest growth rate for any quarter since 2022 [5]. - The stock price increased almost sevenfold from a $34 IPO price to a peak of $230 in less than a year, driven by growing revenue and improved advertising tools [5]. - Gould emphasized that Reddit deserves a revaluation based on its recent earnings growth and future potential, particularly in narrowing the ARPU gap and data licensing opportunities [6].

The Nasdaq sell-off is making Reddit stock look cheap.Investors in Reddit (RDDT 9.75%) stock are having a terrific Tuesday, as shares rise 10.7% through 11:10 a.m. ET.Shares of the social media discussion site, which had more than quadrupled since its initial public offering (IPO) last year, topping $225 in early February, have been cut in half over the past month. That 50% haircut, however, has made Reddit stock "extremely attractive" for new investors according to investment bank Loop Capital, as The Fly ...

Content aggregator Digg is making a comeback with the help of an unlikely partner: Reddit co-founder and rival Alexis Ohanian.Ohanian and Digg founder Kevin Rose acquired the platform for an undisclosed sum. The deal is backed by venture capital firms True Ventures, where Rose is a partner, and Ohanian's Seven Seven Six. The partnership was announced Wednesday in a video post to the company's X account in which Rose called the partnership a "team-up he would have never imagined 20 years ago."Digg was founde ...

Shares of Reddit (RDDT 0.41%) were among the losers on the stock market last month after better-than-expected results weren't enough to keep the company's blistering momentum going.The social media stock has been a huge winner on the market since its IPO a year ago, but investors now seem to believe its valuation has run up far enough, especially as concerns about the broader economy are swirling around growth stocks.According to data from S&P Global Market Intelligence, the stock finished February down 19% ...

Core Viewpoint - The UK's Information Commissioner's Office (ICO) is investigating TikTok, Reddit, and Imgur regarding their use of teenage users' personal information, particularly focusing on data protection and the potential risks associated with content recommendations for users aged 13 to 17 [1][2]. Group 1: Investigation Focus - The ICO's investigation will assess how TikTok utilizes information from teenage users to deliver content recommendations [1][3]. - For Reddit and Imgur, the focus will be on their age assurance measures, including how they estimate and verify children's ages and the use of personal information [2][6]. - The regulator is responding to concerns about social media platforms' data usage and the risk of exposing young users to harmful content through recommendation algorithms [2][4]. Group 2: Algorithm and Content Concerns - TikTok's algorithm, which powers the For You Page, has been criticized for suggesting harmful content, such as eating disorders and self-harm, to new teen accounts shortly after they join [3][4]. - The ICO aims to ensure that the processes used by these platforms are robust enough to protect children from potential harm, including addictive practices and inappropriate content [4][5]. - The Information Commissioner, John Edwards, emphasized that the investigation is not targeting TikTok specifically but is motivated by the platform's growth among young users and the associated risks [5][6]. Group 3: Regulatory Process - The ICO will investigate potential data protection infringements and will seek input from the platforms if evidence of breaches is found before reaching a conclusion [6]. - The regulator hopes to derive lessons from these investigations that can be applied across the industry to enhance data protection practices [6].

Core Viewpoint - Meta's decision to end third-party fact-checking is characterized as a pragmatic reversal of an unviable program, reflecting challenges in implementing fact-checking at scale [1][2]. Group 1: Policy Changes - CEO Mark Zuckerberg announced the installation of a community-based system to replace the third-party fact-checking program [2]. - The rollback of the fact-checking program will begin in the U.S. and will not affect other countries for the time being [3]. Group 2: Background and Criticism - Meta launched its global fact-checking program in 2016 to combat misinformation, partnering with organizations in over 100 countries [3]. - The program faced criticism from Donald Trump and conservatives, who claimed it unfairly targeted right-wing content [1].

Core Viewpoint - Reddit Inc's stock has experienced a significant decline of 26% since reaching a 52-week high of $230.41 on February 10, primarily due to a user growth miss post-earnings and a substantial share sale by CEO Steve Huffman [1] Group 1: Earnings Performance - The fourth quarter earnings report showed a 71% year-over-year revenue increase and earnings per share (EPS) that exceeded estimates, but daily active users decreased due to changes in Google's search algorithm [1] - CEO Huffman indicated that traffic has already rebounded in the first quarter, suggesting that the worst may be over [2] Group 2: Investor Behavior - While retail investors have been selling, hedge funds are accumulating Reddit stock, with 478 funds now holding shares, a 69% increase from the previous quarter [3] - Hedge funds have significantly increased their call options by over 575% in the fourth quarter of 2024, indicating bullish sentiment despite the stock's decline [4] Group 3: Technical Analysis - Technically, Reddit's stock is underperforming, trading below its eight-, 20-, and 50-day simple moving averages, with a bearish relative strength index (RSI) of 31.51 and a negative MACD of -3.94 [5] - However, the 200-day moving average at $103.75 suggests that long-term support remains intact [5] Group 4: Future Outlook - Future growth prospects for Reddit include international expansion, advancements in adtech, and profitable AI data licensing deals, such as its partnership with OpenAI [6] - First-quarter revenue is projected to grow nearly 50%, with adjusted EBITDA expected to increase by 700%-800%, indicating a compelling growth narrative [6] - The current stock dip may represent a reset rather than a significant concern, potentially providing an opportunity for investors willing to accept volatility [6]