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]

Core Viewpoint - Brokerage recommendations significantly influence stock prices, but their reliability is questionable, particularly for Reddit Inc. (RDDT) [1][4][9] Group 1: Brokerage Recommendations for Reddit Inc. - Reddit Inc. has an average brokerage recommendation (ABR) of 1.95, indicating a consensus between Strong Buy and Buy, with 55% of recommendations as Strong Buy and 5% as Buy [2][12] - The ABR is based on recommendations from 20 brokerage firms, with 11 Strong Buy and 1 Buy [2] Group 2: Limitations of Brokerage Recommendations - Studies indicate limited success of brokerage recommendations in guiding investors towards stocks with the best price increase potential [4] - Analysts from brokerage firms often exhibit a strong positive bias due to vested interests, issuing five Strong Buy recommendations for every Strong Sell [5][9] - This misalignment of interests can lead to misleading insights regarding future stock price movements [6][9] Group 3: Zacks Rank as an Alternative - Zacks Rank categorizes stocks into five groups based on earnings estimate revisions, showing a strong correlation with near-term stock price movements [7][10] - The Zacks Rank is updated more frequently than the ABR, reflecting timely changes in earnings estimates [11] - For Reddit Inc., the Zacks Consensus Estimate for the current year has increased by 50.9% over the past month, leading to a Zacks Rank 2 (Buy) [12][13]

Core Insights - Reddit's stock has experienced a significant increase of 20% year to date, despite a drop following its Q4 earnings report, with shares rising more than five times since its March 2024 IPO [1][3] Financial Performance - Reddit's Q4 revenue surged 71% year over year to $427.7 million, with ad revenue increasing by 60% to $394.5 million and other revenue at $33.2 million [4] - Daily users rose by 39% to 102 million, while weekly users grew by 42% to 379 million, although daily user numbers fell short of analyst expectations [5] - Average revenue per user (ARPU) increased by 23% to $4.21 [5] - Adjusted EBITDA soared from $23 million a year ago to $154 million, with earnings per share (EPS) reported at $0.36 [10] Future Outlook - The company forecasts Q1 revenue between $360 million to $370 million, indicating a growth of 48% to 52%, and projects adjusted EBITDA in the range of $80 million to $90 million, representing 700% to 800% growth [11] - Reddit's user base is approximately 50% international, presenting a significant growth opportunity as it rolls out machine learning translation to enhance user engagement [13] Strategic Initiatives - Reddit is investing in adtech and AI to improve advertising performance, including new ad formats and features like Trends for better audience engagement [6] - A new AI product, Reddit Answers, aims to assist users with various inquiries, enhancing the platform's utility [7] - The company is addressing a recent decline in traffic due to a Google search algorithm change, which has since recovered [9] Valuation - The stock trades at a forward price-to-earnings ratio of 66 times 2025 analyst estimates and an enterprise value-to-EBITDA multiple of 58 times, which is considered reasonable given expected high revenue growth [14]

Core Insights - Reddit (RDDT) shares are currently overvalued with a Value Score of F, trading at a forward 12-month Price/Sales ratio of 18.19, significantly higher than its median of 14.76 and the broader Zacks Computer & Technology sector's 6.64 [1][3]. Performance Metrics - RDDT shares have surged 261.2% over the past six months, outperforming the broader Zacks Computer & Technology sector's return of 9.3% and the Zacks Internet - Software industry's rise of 33.9% [3][4]. - The advertising business grew 60% year over year to $395 million in Q4 2024, driven by higher impressions and more efficient ad placements [7][8]. User Engagement and Growth - Daily active users increased to 101.7 million, marking a 39% year-over-year increase in Q4 2024, with international markets seeing a 46% increase [10][11]. - Logged-in users rose 27% year over year, continuing a steady upward trend for the last two years [10]. Advertising Innovations - Reddit introduced new advertising products like the AI-powered Headline Generator and Reddit Pro Trends, enhancing value for advertisers and attracting new customers [9]. - The company is diversifying its advertising solutions and improving ad efficiency, which has emerged as a critical growth driver [6][7]. Strategic Partnerships - Reddit's partnership with Alphabet (GOOGL) enhances content discovery and community engagement, benefiting both companies [12]. - The collaboration with Intercontinental Exchange (ICE) aims to develop new data and analytics products for the financial industry, leveraging Reddit's vast repository of over 16 billion posts and comments [14][15]. Financial Outlook - For Q1 2025, Reddit expects revenues between $360 million and $370 million, with the Zacks Consensus Estimate at $372.59 million, indicating year-over-year growth of 53.35% [16]. - The consensus mark for loss is pegged at 4 cents per share, indicating a year-over-year decline of 113.79% [16].

Core Insights - The digital advertising market is experiencing significant growth, with Reddit reporting a 71% increase in fourth-quarter revenue to $428 million, marking its fastest growth rate since 2022 [1] - The positive performance of Reddit's sales alongside major tech players indicates a growing optimism among advertisers, who are willing to invest in emerging platforms [2] - Media and advertising executives have expressed optimism about the ad market, noting increased ad spending in the fourth quarter, influenced by high consumer engagement and the recent U.S. presidential election [3] Company Performance - Meta reported fourth-quarter sales of $48.39 billion, a 21% increase year-over-year [4] - Microsoft experienced a 21% year-over-year growth in search and news advertising revenue, although specific sales figures were not disclosed [4] - Amazon's online advertising business grew 18% year-over-year to $17.29 billion in the fourth quarter [4] - Alphabet's Google advertising sales increased by 11% year-over-year to $72.46 billion, with YouTube's ad revenue rising 14% to $10.47 billion [4] Market Sentiment - Advertisers are increasingly confident in the effectiveness of advertising, leading to higher investments in the digital ad space [5]

Core Insights - Reddit Inc's shares declined despite reporting strong fourth-quarter results, with revenues of $428 million, a 71% year-on-year increase and a 23% sequential increase [1][2] - Daily active users (DAUs) reached approximately 102 million on average in the fourth quarter, showing solid user growth [2] Financial Performance - Reddit's fourth-quarter revenue growth accelerated to 71% year-on-year from 62% in the previous year, with total ad revenues reaching $395 million, up 60% year-on-year [4][5] - EBITDA exceeded expectations by $23 million, although revenue growth showed signs of tightening compared to the previous quarter [3][4] User Growth and Engagement - DAUs were reported at 101.7 million, reflecting a 39% year-on-year increase and a 5% sequential increase, with international DAUs growing by 46% [5] - The sequential decline in U.S. DAUs was attributed to changes in Google search algorithms, but international user growth remained strong [6][8] AI and Future Growth - Management highlighted improvements in machine learning models, particularly in content translation, which is expected to drive 40-50% of international user growth [3][5] - Analysts expressed increased confidence in Reddit's ability to sustain revenue growth above industry averages, supported by AI advancements and monetization efforts [7] Analyst Ratings and Price Targets - Piper Sandler raised its price target from $197 to $210 while maintaining an Overweight rating [10] - JMP Securities lifted its price target from $190 to $200, reiterating a Market Outperform rating [10] - Needham maintained a Buy rating and raised its price target from $190 to $220 [10] - Goldman Sachs and JPMorgan reiterated Neutral ratings, with Goldman raising its price target from $176 to $185 and JPMorgan cutting its target from $142 to $185 [10]

Core Insights - Reddit reported fourth-quarter 2024 earnings of 36 cents per share, exceeding the Zacks Consensus Estimate by 44% and showing a sequential increase of 20 cents [1][2] - Revenues reached $427.7 million, surpassing the Zacks Consensus Estimate by 4.57% and reflecting a year-over-year surge of 71.2% [2] - The company demonstrated strong revenue growth and improved profitability, driven by effective product strategies and investments in machine learning and search [2] Financial Performance - U.S. revenues contributed 81.3% to total revenues, increasing 70.1% year over year to $347.7 million, while international revenues rose 76.6% to $80 million [4] - Advertising revenue surged 92.2% year over year to $394.5 million, with other revenue reaching $33.2 million [4] - Adjusted EBITDA increased significantly to $154.3 million from $23.2 million in the previous year, with an adjusted EBITDA margin of 36.1% [8] User Engagement Metrics - Daily Active Uniques (DAUq) rose 39% year over year to 101.7 million, with U.S. DAUq increasing 32% to 48.0 million and international DAUq up 46% to 53.7 million [5] - Weekly Active Uniques (WAUq) grew 42% year over year to 379.4 million, with U.S. WAUq at 172.2 million and international WAUq at 207.2 million [5] Cost Management - Non-GAAP sales and marketing expenses increased 29% year over year to $71.6 million, while R&D expenses rose 20.9% to $125.6 million [7] - As a percentage of revenues, non-GAAP sales and marketing expenses decreased by 550 basis points to 16.7%, R&D expenses fell 1,220 basis points to 29.4%, and general and administrative expenses decreased 490 basis points to 10.4% [7] Cash Flow and Balance Sheet - As of December 31, 2024, Reddit had cash and cash equivalents of $1.84 billion, up from $1.74 billion as of September 30, 2024 [9] - The company generated $90 million in cash from operating activities in the fourth quarter, compared to $71.6 million in the previous quarter, with free cash flow at $89.2 million [9] Guidance - For the first quarter of 2025, Reddit expects revenues between $360 million and $370 million, with adjusted EBITDA anticipated between $80 million and $90 million [11]

Group 1 - The Pragmatic Investor focuses on global macro, international equities, commodities, tech, and cryptocurrencies, aiming to guide investors of all levels [1] - The platform offers features such as a portfolio, weekly market updates, actionable trades, technical analysis, and a chat room for investor engagement [1] - James Foord, an economist with a decade of experience in global market analysis, leads The Pragmatic Investor, emphasizing the creation of diversified portfolios to preserve and increase wealth [1]

Group 1: Reddit Inc - Reddit's stock fell 4.8% to $206.10 after reporting fourth-quarter user numbers that did not meet expectations, despite a year-over-year increase of 39% in daily active unique visitors to 101.7 million, which was below the consensus estimate of 103.1 million [2] - The company still managed to beat both top and bottom-line expectations for the quarter, and year-to-date, Reddit's stock has increased by 23.6% [2] Group 2: Deere & Co - Deere's stock decreased by 3.4% to $460.15, despite reporting better-than-expected earnings and revenue for its fiscal first quarter, as investors reacted to the company's cautious outlook indicating softer demand ahead [3] - Year-to-date, Deere's stock maintains an 8.3% lead [3] Group 3: Options Activity - Both Reddit and Deere are experiencing higher-than-usual options activity, with Reddit's stock seeing 11 times its average intraday volume and Deere's stock traded at five times its typical volume for this point in a session [4] - The most popular options contract for Reddit is the February 175 put, while Deere's most active contract is the March 470 put [4]