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Prediction: Reddit Stock Could Outperform Meta and Snap Over the Next 12 Months

Core Viewpoint - Reddit has successfully positioned itself in the online market, showing potential for significant stock price growth compared to peers like Meta and Snap [1][2]. Financial Performance - Reddit's Q2 revenue increased by 78% year-over-year to $500 million, driven by a remarkable 84% rise in ad sales to $465 million [5]. - The company reported a profit of $89 million, a turnaround from a $10 million loss in the same quarter of 2024, with free cash flow rising by $84 million to $111 million [5]. - For Q3, Reddit projects revenue between $535 million and $545 million, with adjusted EBITDA expected to be between $185 million and $195 million, surpassing analyst expectations [6]. User Engagement - Daily active unique users (DAUq) grew by 21% year-over-year, exceeding 21 million [6]. - The company's initiatives, such as dynamic product ads and AI tools for ad creation, have contributed to increased user engagement and targeted advertising [8][9]. Market Position and Growth Potential - Analysts predict nearly 60% annual revenue growth for Reddit in 2025, with a 31% increase in 2026, alongside a significant improvement in per-share profitability [12]. - In contrast, revenue and profitability growth for Meta and Snap are expected to be much lower during the same period [13]. Valuation - Reddit's forward price-to-earnings ratio stands at 121, significantly higher than Snap's under 37 and Meta's sub-29, reflecting strong investor interest due to its high performance and growth potential [14].