Should You Buy, Sell or Hold Reddit Stock at P/S of 18.19X?

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].