Reddit vs. Meta: Which Social Media Giant Stock Is the Better Buy Now?

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 Social Media Giant stocks has the greater upside potential? Let’s find out.The Case for RDDT StockReddit is benefiting from strong growth in user engagement, including rising daily and weekly active users, ARPU gains, and the expansion of advertiser tools such as Dynamic Product Ads, Reddit Pixel and Conversion API.In the second quarter of 2025, Reddit’s advertising revenue increased 84% year over year to $465 million, driven by both existing advertisers deepening their investments and a 50% rise in the active advertiser count.  This growth highlights Reddit’s ability to attract advertisers across large, mid-market and small-to-medium-sized businesses.The company’s focus on automation and usability is another driver of its advertising success. The platform has integrated tools like Smartly, which combines Reddit’s audience and performance data with AI-powered advertising capabilities, making it easier for advertisers to launch, scale and optimize campaigns.RDDT’s expanding portfolio has been noteworthy. The company recently announced the launch of new Reddit Pro tools for publishers. These tools include article insights, RSS auto-import, and AI-powered community recommendations, all of which are currently in beta testing. The platform also introduced a better in-app link viewing experience. This change makes it easier for users to read articles and join conversations directly on Reddit.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. In the second quarter of 2025, Advertising revenues increased 21.5% year over year to $46.56 billion, accounting for 98% of second-quarter revenues. At cc, revenues increased 22% year over year.  The company’s AI-powered ad recommendation models have improved efficiency and performance, driving approximately 5% more ad conversions on Instagram and 3% on Facebook. Improvements in AI-powered recommendation systems have led to a 5% increase in time spent on Facebook and a 6% increase on Instagram in the second quarter of 2025.Meta Platforms is also seeing an increase in the usage of its AI creative tools. AI is heavily dependent on data, of which META has a trove, driven by its more than 3.48 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 year-to-date period, shares of Reddit and Meta Platforms have rallied 24.6% and 22.3%, respectively. 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, including tariff uncertainties, which do not bode well for Meta Platforms’ advertising business. Higher tariffs are expected to hurt digital ad spending.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 14.79X, which is higher than META’s 8.18X.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 $1.82 per share, which has increased by a penny over the past 30 days, indicating a 154.65% 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 $28.14 per share, which has increased by a penny over the past 30 days, indicating a 17.94% increase 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 261.89% is higher than META’s surprise of 20.47%.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 #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.5 Stocks Set to DoubleEach was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in the coming year. While not all picks can be winners, previous recommendations have soared +112%, +171%, +209% and +232%.Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.Today, See These 5 Potential Home Runs >>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