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

Core Insights - Reddit (RDDT) and Meta Platforms (META) are prominent players in the digital advertising space, with RDDT emerging as a community-driven platform and META dominating through established platforms like Facebook and Instagram [1][2] Digital Advertising Market Overview - The global digital advertising market was valued at $488.4 million in 2024 and is projected to reach $1,164.25 million by 2030, with a CAGR of 15.4% from 2025 to 2030, benefiting both Reddit and META [2] Reddit (RDDT) Performance - Reddit is experiencing strong user engagement, with a 20% year-over-year increase in daily active users (116 million) and weekly active users (444 million) [5] - Advertising revenues for Reddit surged 74% year over year to $549 million in Q3 2025, driven by expanding advertiser relationships and a diversified customer base [4][12] - The company is enhancing its advertising tools, including Dynamic Product Ads and Reddit Pixel, which are contributing to increased advertiser adoption [3] Meta Platforms (META) Performance - Meta's advertising revenues increased by 25.6% year over year to $50.08 billion in Q3 2025, accounting for 97.7% of total revenues [8][12] - AI integration across platforms like Facebook and Instagram is driving user engagement, with a 5% increase in time spent on Facebook and a 30% increase on Threads [9] - Meta is leveraging its vast user data to enhance AI-powered creative tools, which are now available in over 200 countries [10] Stock Performance and Valuation - Over the past six months, Reddit's shares have surged 73.1%, while Meta's shares have declined by 7.8% [13] - RDDT shares are currently trading at a forward Price/Sales ratio of 14.14X, compared to META's 7.03X, indicating that both stocks are considered overvalued [16] - The Zacks Consensus Estimate for RDDT's 2025 earnings is $2.35 per share, reflecting a 170.57% year-over-year increase, while META's estimate is $23.43 per share, indicating a 1.80% decline [18] Conclusion - Reddit is positioned for greater upside potential due to rapid revenue growth and an expanding advertiser base, while META faces challenges in monetizing its AI investments amid stiff competition [21][22]