Reddit Surges Ahead: Outshining Snap in Market Valuation

Reddit Inc RDDT has made a significant leap over Snap Inc SNAP in social media rankings, increasing by 12% on Election Day and achieving a market cap of $21.5 billion, surpassing Snap’s $20.4 billion.

Snap’s Struggles: Growth Stalled

This shift marks a challenging time for Snap, as it grapples with maintaining its position in a highly competitive social media landscape. Currently trading at just over $12 per share, investor confidence in Snap appears shaky, especially given its IPO price of $17 back in 2017.

The user growth for Snap in the U.S. has flattened, remaining stagnant for two years. This stagnation is particularly troublesome since North America generates 60% of its revenue.

Projected revenue is set to rise from $4.1 billion in 2021 to an estimated $5.3 billion in 2024, reflecting a modest increase of 29% over three years. In the fast-evolving social media realm, such limited growth could label Snap as a “permanently subscale” player, as suggested by The Information’s Martin Peers.

Read Also: Trump Media, Reddit, Devon Energy, Super Micro Computer, And Tesla Buzzing Among Investors On Election Day

Reddit’s Ascent: User Growth and Ad Revenue Increase

In stark contrast, Reddit has experienced impressive growth, with daily active users increasing by 47% over the past year, largely driven by the heightened interest surrounding major events like the election. This expansion in users has resulted in a surge in ad revenue, positively impacting Reddit’s current valuation and encouraging investor optimism.

Reddit’s broad discussion platform offers a diverse range of topics, potentially attracting a larger audience than Snap’s narrower, image-focused service. As election results come in, it is expected that Reddit will witness higher engagement levels than Snap, underscoring its growing influence and reach.

Positive Indicators for Reddit’s Stock

Reddit’s stock is exhibiting optimistic trends in its technical analysis.

Chart created using Benzinga Pro

Currently priced at $122.57, Reddit’s stock exceeds its five, 20, and 50-day exponential moving averages, indicating a robust upward trend. Furthermore, the eight-day, 20-day, and 50-day simple moving averages (SMA) are significantly lower than the current price, reinforcing the positive signal.

The Moving Average Convergence Divergence (MACD) indicator stands at 12.26 while the Relative Strength Index (RSI) reads 78.95, both suggesting that the stock might be overbought. Persistent buying activity has led to the price increase, signaling strong momentum but cautioning that a slowdown could occur soon.

Snap’s Limited Growth Outlook

Chart created using Benzinga Pro

However, its standing compared to the 200-day SMA at $12.53 indicates potential long-term challenges. Snap’s MACD sits at 0.48 and its RSI is at 64.44, which shows some bullish momentum, but it falls short compared to Reddit’s indicators.

Reddit’s Future Looks Promising

As Reddit continues to gain traction, investors recognize its potential for growth that Snap may struggle to replicate.

With Snap facing the uphill task of increasing its user base and expanding revenue in a crowded market, Reddit appears to be capitalizing on a growing wave of user engagement, generating excitement about what lies ahead.

Read Next:

Photo: Shutterstock