Reddit's Stock Drop Presents Long-Term Buying Opportunity
Written by Emily J. Thompson, Senior Investment Analyst
Updated: May 18 2026
0mins
Source: Fool
- Strong User Growth: Reddit reported 126.8 million daily active users in Q1 2026, a 17% year-over-year increase, indicating that its user base is growing faster than most social networks, thereby reducing reliance on search engines and enhancing market competitiveness.
- Sustained Revenue Growth: Reddit's revenue surged by 69% year-over-year, projecting $720 million in Q2 2026 at the midpoint, and although the growth rate has decelerated, it still surpasses the growth rates of Meta and Alphabet, reflecting robust performance in its advertising business.
- Significant Content Advantage: The user-generated content on Reddit provides a unique business model, with OpenAI and Alphabet utilizing its content to train AI models; while 'other revenue' grew only 15%, its high margins still contribute significantly to annual revenue.
- Stable Market Share: Despite challenges from AI technologies, Reddit's weekly active users reached 493.1 million, up 23% year-over-year, and logged-out users grew by 26%, demonstrating its competitive edge and user retention in the social media landscape, making the current stock dip a favorable buying opportunity.
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Analyst Views on RDDT
Wall Street analysts forecast RDDT stock price to rise
22 Analyst Rating
14 Buy
8 Hold
0 Sell
Moderate Buy
Current: 167.690
Low
207.00
Averages
260.00
High
325.00
Current: 167.690
Low
207.00
Averages
260.00
High
325.00
About RDDT
Reddit, Inc. operates a social platform, Reddit. Reddit is a community of communities. It is built on shared interests, passion, and trust and is home to open and authentic conversations on the Internet. Reddit is a global, digital city where anyone in the world can join a community to learn from one another, engage in authentic conversations, explore passions, research new hobbies, exchange goods and services, create new communities and experiences, share a few laughs, and find belonging. Reddit has thousands of communities, endless conversations, and authentic human connections. Communities on Reddit are organized based on specific interests and are called subreddits. Reddit offers real-time access to evolving and dynamic topics, such as sports, movies, news, fashion, and the latest trends. On Reddit, users can submit, vote, and comment on the topics they care about. It has approximately 100,000+ active communities and approximately 101+ million daily active visitors.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
Quarterly Revenue Analysis of Reddit and Snap
- Reddit Revenue Surge: For the quarter ending March 31, 2026, Reddit reported revenue of $663.4 million, reflecting a remarkable 69% year-over-year growth, indicating strong potential in its advertising business despite challenges from Meta's competing application.
- Snap Revenue Performance: In the same quarter, Snap generated $1.5 billion in revenue, a 12% increase year-over-year; however, it remains unprofitable with a net loss of $89 million, highlighting pressure in its market position.
- Profitability Comparison: Reddit achieved a net income of $204 million, soaring 680% year-over-year, showcasing the success of its business model, while Snap continues to face ongoing losses, prompting investors to monitor its future profitability.
- Market Competition Impact: With Meta launching a competing product, Reddit's shares have significantly declined from the 52-week high of $282.95 reached in 2025, necessitating investor vigilance regarding potential impacts on future revenue growth.
See More
Reddit Outpaces Snap in Revenue Growth
- Revenue Growth Comparison: In Q1 2026, Reddit's revenue surged 69% year-over-year to $663.4 million, while Snap's sales grew only 12% to $1.5 billion, indicating a significant increase in the popularity of Reddit's offerings.
- Net Income Performance: Reddit achieved a net income of $204 million, marking a staggering 680% year-over-year increase, whereas Snap reported a net loss of $89 million, despite reducing its losses by 36%, highlighting Reddit's rapidly improving profitability.
- Market Competition Pressure: With Meta planning to launch a competing application in May 2026, Reddit's sales growth may face potential slowdowns, prompting investors to monitor revenue changes in the upcoming quarters to assess the stability of its market position.
- Investor Considerations: Despite Reddit's strong growth momentum, its stock price has fallen significantly from the 52-week high of $282.95 reached in 2025, leading investors to carefully evaluate its future growth potential before making investment decisions.
See More
Social Media Stocks Struggle in 2026
- Poor Stock Performance: As of the afternoon of May 27, 2026, social media stocks have generally declined, indicating a pessimistic outlook on future growth that could further weaken investor confidence.
- Increased Industry Challenges: The social media sector faces multiple challenges, including declining advertising revenues and stagnant user growth, forcing companies to reassess their business models and market strategies, which impacts overall profitability.
- Lackluster Market Response: Despite attempts by social media companies to attract users through innovative features, the market response remains tepid, reflecting a waning consumer interest that could lead to long-term user attrition.
- Investor Sentiment Deteriorates: The ongoing struggles of social media stocks may trigger concerns among investors regarding the entire tech sector, potentially affecting the financing capabilities and market valuations of related companies.
See More
Social Media Stocks Struggle; AI May Create First Trillionaire
- Social Media Struggles: In 2026, social media stocks are underperforming, with Reddit notably excluded from the latest top 10 stock recommendations, indicating investor skepticism about its future prospects.
- Investment Returns Comparison: According to The Motley Fool, Netflix has yielded a staggering 465,733% return since December 2004, while Nvidia has achieved an impressive 1,313,467% return since April 2005, underscoring the importance of selecting quality stocks.
- Stock Advisor Performance: Stock Advisor boasts an average total return of 985%, significantly outperforming the S&P 500's 211%, highlighting its exceptional stock-picking ability and attracting considerable investor interest.
- Power of Investment Community: The Motley Fool not only recommends Reddit but also encourages investors to join its community built by individual investors, emphasizing the value of collective wisdom in investment decisions.
See More
Profit-Taking on Micron and AMD; Exploring Axon, Reddit, and Shopify
- Profit-Taking Strategy: On May 26, 2026, I decided to take profits on Micron and AMD, reflecting a cautious approach to market volatility and a reassessment of the short-term outlook for both companies.
- New Investment Opportunities: I am looking into Axon, Reddit, and Shopify, which demonstrate strong growth potential in their respective fields, particularly in technology and e-commerce, potentially providing new revenue sources for my portfolio.
- Market Dynamics Analysis: The stock prices mentioned were based on the trading day of May 26, 2026, highlighting the significant impact of changing market conditions on investment decisions and emphasizing the necessity of timely strategy adjustments.
- Subscription and Engagement: Encouraging viewers to subscribe to the channel and click the special offer link indicates an intention to build an interactive relationship with the audience, which may also support future content creation.
See More
UBS Identifies Investment Opportunities in Broadcom and Accenture
- Market Opportunity Analysis: UBS believes that meaningful investment opportunities still exist despite stocks nearing all-time highs, particularly in companies like Broadcom and Accenture, reflecting optimism for future growth.
- Broadcom's Strong Performance: Broadcom's stock has risen 22% this year, with a forecasted cash flow return on investment (CFROI) exceeding 80% by 2027, indicating its leadership in ASIC chips and the importance of AI workloads, suggesting robust future performance.
- Accenture Facing Challenges: Although Accenture's CFROI is projected to reach 43.7%, its stock has fallen 34% this year, reflecting market concerns over margin pressure and disintermediation risks from emerging AI models, leading to subdued investor sentiment.
- Investment Strategy Recommendations: UBS advises investors to focus on companies with improving cash flow returns and high-quality laggards, emphasizing the potential value of these firms in the software and IT consulting sectors, despite their stock prices having declined by over 5%.
See More
Quarterly Revenue Analysis of Reddit and Snap
- Reddit Revenue Surge: For the quarter ending March 31, 2026, Reddit reported revenue of $663.4 million, reflecting a remarkable 69% year-over-year growth, indicating strong potential in its advertising business despite challenges from Meta's competing application.
- Snap Revenue Performance: In the same quarter, Snap generated $1.5 billion in revenue, a 12% increase year-over-year; however, it remains unprofitable with a net loss of $89 million, highlighting pressure in its market position.
- Profitability Comparison: Reddit achieved a net income of $204 million, soaring 680% year-over-year, showcasing the success of its business model, while Snap continues to face ongoing losses, prompting investors to monitor its future profitability.
- Market Competition Impact: With Meta launching a competing product, Reddit's shares have significantly declined from the 52-week high of $282.95 reached in 2025, necessitating investor vigilance regarding potential impacts on future revenue growth.
See More
Reddit Outpaces Snap in Revenue Growth
- Revenue Growth Comparison: In Q1 2026, Reddit's revenue surged 69% year-over-year to $663.4 million, while Snap's sales grew only 12% to $1.5 billion, indicating a significant increase in the popularity of Reddit's offerings.
- Net Income Performance: Reddit achieved a net income of $204 million, marking a staggering 680% year-over-year increase, whereas Snap reported a net loss of $89 million, despite reducing its losses by 36%, highlighting Reddit's rapidly improving profitability.
- Market Competition Pressure: With Meta planning to launch a competing application in May 2026, Reddit's sales growth may face potential slowdowns, prompting investors to monitor revenue changes in the upcoming quarters to assess the stability of its market position.
- Investor Considerations: Despite Reddit's strong growth momentum, its stock price has fallen significantly from the 52-week high of $282.95 reached in 2025, leading investors to carefully evaluate its future growth potential before making investment decisions.
See More
Social Media Stocks Struggle in 2026
- Poor Stock Performance: As of the afternoon of May 27, 2026, social media stocks have generally declined, indicating a pessimistic outlook on future growth that could further weaken investor confidence.
- Increased Industry Challenges: The social media sector faces multiple challenges, including declining advertising revenues and stagnant user growth, forcing companies to reassess their business models and market strategies, which impacts overall profitability.
- Lackluster Market Response: Despite attempts by social media companies to attract users through innovative features, the market response remains tepid, reflecting a waning consumer interest that could lead to long-term user attrition.
- Investor Sentiment Deteriorates: The ongoing struggles of social media stocks may trigger concerns among investors regarding the entire tech sector, potentially affecting the financing capabilities and market valuations of related companies.
See More
Social Media Stocks Struggle; AI May Create First Trillionaire
- Social Media Struggles: In 2026, social media stocks are underperforming, with Reddit notably excluded from the latest top 10 stock recommendations, indicating investor skepticism about its future prospects.
- Investment Returns Comparison: According to The Motley Fool, Netflix has yielded a staggering 465,733% return since December 2004, while Nvidia has achieved an impressive 1,313,467% return since April 2005, underscoring the importance of selecting quality stocks.
- Stock Advisor Performance: Stock Advisor boasts an average total return of 985%, significantly outperforming the S&P 500's 211%, highlighting its exceptional stock-picking ability and attracting considerable investor interest.
- Power of Investment Community: The Motley Fool not only recommends Reddit but also encourages investors to join its community built by individual investors, emphasizing the value of collective wisdom in investment decisions.
See More
Profit-Taking on Micron and AMD; Exploring Axon, Reddit, and Shopify
- Profit-Taking Strategy: On May 26, 2026, I decided to take profits on Micron and AMD, reflecting a cautious approach to market volatility and a reassessment of the short-term outlook for both companies.
- New Investment Opportunities: I am looking into Axon, Reddit, and Shopify, which demonstrate strong growth potential in their respective fields, particularly in technology and e-commerce, potentially providing new revenue sources for my portfolio.
- Market Dynamics Analysis: The stock prices mentioned were based on the trading day of May 26, 2026, highlighting the significant impact of changing market conditions on investment decisions and emphasizing the necessity of timely strategy adjustments.
- Subscription and Engagement: Encouraging viewers to subscribe to the channel and click the special offer link indicates an intention to build an interactive relationship with the audience, which may also support future content creation.
See More
UBS Identifies Investment Opportunities in Broadcom and Accenture
- Market Opportunity Analysis: UBS believes that meaningful investment opportunities still exist despite stocks nearing all-time highs, particularly in companies like Broadcom and Accenture, reflecting optimism for future growth.
- Broadcom's Strong Performance: Broadcom's stock has risen 22% this year, with a forecasted cash flow return on investment (CFROI) exceeding 80% by 2027, indicating its leadership in ASIC chips and the importance of AI workloads, suggesting robust future performance.
- Accenture Facing Challenges: Although Accenture's CFROI is projected to reach 43.7%, its stock has fallen 34% this year, reflecting market concerns over margin pressure and disintermediation risks from emerging AI models, leading to subdued investor sentiment.
- Investment Strategy Recommendations: UBS advises investors to focus on companies with improving cash flow returns and high-quality laggards, emphasizing the potential value of these firms in the software and IT consulting sectors, despite their stock prices having declined by over 5%.
See More
