Core Viewpoint - Reddit has experienced significant growth since its IPO, but recent stock price volatility raises questions about its valuation and future potential [1][2][13] Growth Metrics - Reddit's unique platform combines news aggregation, discussion forums, and social media, allowing it to carve out a niche in the market [4] - The company measures growth through daily active unique (DAUq) users, with a notable increase in logged-in users, which enhances monetization opportunities [5][6] - DAUq users grew from 82.7 million in Q1 2024 to 101.7 million in Q4 2024, reflecting a growth rate of 48% to 39% over the quarters [7] - The percentage of logged-in DAUq users increased from 37% in Q1 2024 to 45% in Q4 2024, contributing to average revenue per user (ARPU) growth [8] Revenue and Profitability - Reddit's revenue growth year-over-year accelerated from 48% in Q1 2024 to 71% in Q4 2024, driven by increased user engagement and advertising [8] - The company expects revenue for Q1 2025 to rise by 48% to 52% year-over-year, with a projected full-year revenue of 19.3 billion, trading at 11 times this year's sales and 34 times its adjusted EBITDA, indicating a reasonable valuation relative to its growth potential [11] - The platform's blend of features continues to attract users and generate data for targeted advertising, suggesting further growth opportunities [12] Future Outlook - Analysts expect Reddit to maintain growth momentum, but macroeconomic factors such as tariffs and trade wars could impact advertising spending [12] - Despite recent stock volatility, Reddit is viewed as a potential growth stock for long-term investors [13]
Down Nearly 30% in 2025: Is Reddit Stock a Buy?