Could Reddit Stock Help You Become a Millionaire?

Key Points

• Reddit has been a veritable juggernaut, soaring since its IPO early last year.

• The social media site's growing popularity has translated into massive revenue growth.

• However, Reddit's market cap now stands at $39 billion, leaving less room for investment gains.

• 10 stocks we like better than Reddit ›

Reddit (NYSE: RDDT) has only traded since its initial public offering (IPO) in March 2024. Since then, its shares have surged as investors became more aware of how the company differentiates itself from other social media stocks, particularly industry giant Meta Platforms.

When searching for stocks that can help them become millionaires, many investors look at recent IPO stocks, ideally ones whose growth story has just begun. Given its successes and its recent move to go public, let's examine whether Reddit holds enough growth potential to mint millionaires.

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Image source: Getty Images.

Understanding Reddit

Reddit differentiates itself from other social media sites by acting as a "community of communities." Its site now hosts over 100,000 communities. Those have made it a go-to destination for information -- so much so that 110 million daily active users visit its forums, a number that has risen by 21% over the last year.

Not surprisingly, Reddit follows the lead of its social media counterparts by earning most of its revenue from digital advertising. Additional revenue comes from data licensing and premium subscriptions.

That model has helped the company grow to an enormous size. Thanks to the 540% gain over the stock's history, its market cap now stands at just over $39 billion.This could present challenges if you're an individual investor hoping to become a millionaire from this stock. If you bought $10,000 worth of shares at this level, the 100-fold gain needed to multiply your position to $1 million would take the market cap to $3.9 trillion.

That's more than double Meta's current market cap of $1.9 trillion. It's also worth noting that only two companies, Nvidia and Microsoft, now have market caps above $3.9 trillion. So you'd face a considerable challenge in meeting that $1 million goal.

Reddit's second-quarter results

However, the company's financial results for the second quarter of 2025 show the potential for massive stock gains. In Q2, Reddit brought in $500 million in revenue, a 78% increase from year-ago levels. Advertising revenue growth of 84% during that period drove most of those gains, demonstrating its success as a social media stock. Also, gross margin improved 130 basis points to 90.8%, pointing to an improving financial condition.

Moreover, costs and expenses grew by a comparatively modest 38%, allowing Reddit to turn profitable. In Q2, it reported a net income of $89 million, a vast improvement over the $10 million loss in the second quarter of 2024. Not surprisingly, shareholders can also expect growth to continue into Q3. Reddit forecasts Q3 revenue of between $535 million and $545 million. That would translate to a yearly increase of 55% at the midpoint.

However, that guidance would also amount to a sequential slowdown, and it's unclear how investors will react given the stock's valuation. Reddit's recent profitability leaves it with a P/E ratio of 329 -- likely not applicable as a valuation measurement -- though the forward P/E ratio of 59 could attract new investors.

Still, you might also consider the price-to-sales (P/S) ratio of 25, now close to record highs for the stock. It's reasonable to expect this metric to exceed the S&P 500's average P/S of 3.2, but you may be less tolerant of the current multiple when earnings growth is slowing down. While that's unlikely to change Reddit's long-term growth prospects, it makes the stock's near-term trajectory less certain.

Will Reddit stock help you become a millionaire?

In its current state, Reddit may help you become a millionaire, but it is unlikely to take you there without a sizable investment. Reddit leads the industry in terms of online forums, and its vast user base and rapid revenue growth should bode well for shareholders.

Nonetheless, its $39 billion market capitalization puts it deep into large-cap territory. Considering that 100-fold growth would take it to a size more than double that of the dominant social media stock, it's unlikely that an investment of $10,000 or less can grow to $1 million.

Ultimately, Reddit shows considerable potential to deliver market-beating returns over time. Still, you should be willing to make a substantial investment if you want to grow a Reddit stock position to $1 million and beyond.

Should you invest $1,000 in Reddit right now?

Before you buy stock in Reddit, consider this:

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Will Healy has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Meta Platforms, Microsoft, and Nvidia. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.