Is Reddit (RDDT) a Buy?
Let's dig into this one...
Overview: Reddit is a social media platform where users can engage in conversations, explore, and create communities centered around their interests. Founded in 2005 by Steve Huffman and Alexis Ohanian, Reddit has evolved into a vast network of user-generated content organized into specialized forums known as "subreddits." The platform's unique community-driven model relies on volunteer moderators to manage content and maintain subreddit guidelines. Reddit generates revenue through advertising, Premium Memberships, and data licensing agreements
Bulls Say
Reddit’s improved web platform, better ML-powered translation, and content recommendations will drive expansion into international markets, helping boost user growth
Reddit has significant headroom to grow monetization through expanded ad formats like search and video, increasing ad load and improving ad targeting capabilities
Reddit’s vast repository of user-generated data is enticing for training LLMs and social listening, making it an increasingly valuable source to leverage as demand for high-quality conversational data grows
Bears Say
A sizable amount of traffic stems from Google search, making Reddit vulnerable to any unpredictable Google algorithm changes
Increasing competition from larger players (Meta, TikTok, YouTube) to develop superior AI-based ad targeting tools could marginalize Reddit’s appeal to advertisers
Reddit’s struggle to convert casual browsers (MAUs) into regular users (DAUs) limits its ability to command premium ad rates
Technical Analysis: RDDT's technical picture is NEUTRAL as the 200-day MA is sloping upwards however the share price and 15 and 50-day MAs are below this key level.
