RDDT vs. META: Which Digital Advertising Stock Is a Better Buy?

Reddit RDDT and Meta Platforms META are leading social media platforms that monetize user engagement through digital advertising. While RDDT is an emerging social media platform, gaining traction with community-driven advertising, Meta leads the broader social networking space through platforms like Facebook and Instagram.Per the Grand View Research report, the global digital advertising market size was valued at $488.4 million in 2024 and is expected to reach $1,164.25 million by 2030, registering a CAGR of 15.4% from 2025 to 2030. Both Reddit and META are expected to benefit from this rapid growth pace.RDDT or META — Which of these Digital Advertising stocks has the greater upside potential? Let’s find out.The Case for RDDT StockReddit is benefiting from strong user engagement, including rising daily and weekly active users, gains in Average Revenue Per User (ARPU), and the expansion of advertiser tools such as Dynamic Product Ads, Reddit Pixel, and CAPI. This is driving advertiser adoption and delivering strong performance outcomes. In the third quarter of 2025, Advertising revenues surged 74% year over year to $549 million, driven by a combination of expanding relationships with existing advertisers, acquiring new customers, and diversifying its advertiser base across large, mid-market, and SMB businesses.The company is also benefiting from its investment in AI-powered tools, which are driving the company’s user engagement. In the third quarter of 2025, RDDT reported 116 million daily active users and 444 million weekly active users, both increasing 20% year over year.In the third quarter of 2025, more than 75 million people searched on Reddit weekly, showcasing the growing popularity of this feature. The company also integrated Reddit Answers into its core search functionality, increasing visibility across conversations and expanding its reach to non-English languages, including Spanish, German, Italian, French, and Portuguese.The Case for META StockMeta Platforms’ focus on integrating AI into its platforms, which include Facebook, WhatsApp, Instagram, Messenger, and Threads, is driving user engagement to boost ad revenues. The company’s focus on integrating AI into its platforms — Facebook, WhatsApp, Instagram, Messenger, and Threads — is driving user engagement to boost ad revenues. Advertising revenues increased 25.6% year over year to $50.08 billion and accounted for 97.7% of third-quarter revenues. At cc, revenues increased 25% year over year.In third-quarter 2025, improvements in AI-powered recommendation systems have led to a 5% increase in time spent on Facebook and 30% on Threads. In the same quarter, Meta introduced AI tools like video generation, image animation, and AI-generated music to help advertisers optimize their ad creatives and improve performance.Meta Platforms is seeing increased usage of its AI creative tools. AI is heavily dependent on data, of which META has a trove, driven by its more than 3.54 billion daily users. Meta AI usage continues to increase, which is now available in more than 200 countries and territories.Price Performance and Valuation of RDDT and METAIn the trailing six-month period, shares of Reddit have surged 73.1% while Meta Platforms' stock has lost 7.8%. The outperformance in Reddit can be attributed to strong ad revenue growth, driven by improved targeting, performance tools, global expansion, and increased engagement through search-led initiatives, such as Reddit Answers.Despite a robust portfolio and clientele, META is facing challenging macroeconomic conditions, stiff competition, and regulatory headwinds.RDDT and META Stock PerformanceImage Source: Zacks Investment ResearchValuation-wise, RDDT and META shares are currently overvalued, as suggested by a Value Score of F and C, respectively.In terms of the forward 12-month Price/Sales, RDDT shares are trading at 14.14X, which is higher than META’s 7.03X.RDDT and META ValuationImage Source: Zacks Investment ResearchHow Do Earnings Estimates Compare for RDDT & META?The Zacks Consensus Estimate for RDDT’s 2025 earnings is pegged at $2.35 per share, which remained unchanged over the past 30 days, indicating a 170.57% year-over-year rise.Reddit Inc. Price and Consensus Reddit Inc. price-consensus-chart | Reddit Inc. QuoteThe Zacks Consensus Estimate for META’s 2025 earnings is pegged at $23.43 per share, which has declined 2.49% over the past 30 days, indicating a 1.80% decline year over year.Meta Platforms, Inc. Price and Consensus Meta Platforms, Inc. price-consensus-chart | Meta Platforms, Inc. QuoteRDDT and META’s earnings beat the Zacks Consensus Estimate in all the trailing four quarters. However, RDDT’s average surprise of 192.49% is higher than META’s surprise of 18.85%.ConclusionWhile both Reddit and Meta Platforms stand to benefit from the booming digital advertising market, Reddit offers greater upside potential given its rapid revenue growth, surging advertiser base and expanding engagement tools.META now expects to invest significantly more over the next few years in developing more advanced models and the world's largest AI services. However, monetization of these AI services will take considerable time, which is a concern. Stiff competition also remains a headwind.Currently, Reddit sports a Zacks Rank #1 (Strong Buy), making the stock a stronger pick than Meta Platforms, which has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank stocks here.Zacks Naming Top 10 Stocks for 2026Want to be tipped off early to our 10 top picks for the entirety of 2026? History suggests their performance could be sensational.From 2012 (when our Director of Research Sheraz Mian assumed responsibility for the portfolio) through November, 2025, the Zacks Top 10 Stocks gained +2,530.8%, more than QUADRUPLING the S&P 500’s +570.3%.Now Sheraz is combing through 4,400 companies to handpick the best 10 tickers to buy and hold in 2026. Don’t miss your chance to get in on these stocks when they’re released on January 5. Be First to New Top 10 Stocks >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Meta Platforms, Inc. (META): Free Stock Analysis Report Reddit Inc. (RDDT): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks