RDDT vs. SNAP: Which Social Media Stock Has More Upside Ahead?

Reddit RDDT and Snap SNAP are leading social media platforms that monetize user engagement through digital advertising. While RDDT is an emerging social media platform, gaining traction with community-driven advertising, Snap focuses on visual messaging, AR experiences and creator content. 

Per the Grand View Research report, the global digital advertising market size was valued at $488.4 million in 2024 and is expected to reach $1,164.25 million by 2030, registering a CAGR of 15.4% from 2025 to 2030. Both Reddit and Snap are expected to benefit from this rapid growth pace.

RDDT or SNAP — Which of these Social Media stocks has the greater upside potential? Let’s find out.

The Case for RDDT Stock

Reddit is benefiting from strong user engagement, including rising daily and weekly active users, gains in Average Revenue Per User (ARPU), and the expansion of advertiser tools such as DPA, Reddit Pixel and CAPI. 

In the third quarter of 2025, Advertising revenues surged 74% year over year to $549 million, driven by both existing advertisers deepening their investments and a 75% rise in the active advertiser count.  This growth highlights Reddit’s ability to attract advertisers across large, mid-market, and small-to-medium-sized businesses.

Reddit’s expanding portfolio has been a major growth driver. In the third quarter of 2025, ARPU grew 41% year over year to $5.04, indicating that portfolio expansions are driving higher monetization per user.

RDDT is also expanding search-led engagement through Reddit Answers. In the third quarter of 2025, over 75 million people searched on Reddit weekly, showcasing the growing popularity of this feature. The company has integrated Reddit Answers into its core search functionality, increasing visibility across conversations and expanding its reach to non-English languages, including Spanish, German, Italian, French, and Portuguese.

The Case for SNAP Stock

Snap is benefiting from strong revenue growth driven by improved advertising demand and the expansion of direct revenue streams. In the third quarter of 2025, Advertising revenues rose 5% year over year to $1.32 billion, driven primarily by growth in Direct Response (DR) advertising revenue, which increased 8% year over year. Growth in DR advertising revenue was primarily driven by strong demand for Pixel Purchase and App Purchase optimizations.

Snapchat has reached a milestone of more than 477 million daily active users, increasing 8% year over year, and monthly active users increased 7% year over year to 943 million in the third quarter of 2025. This growth was driven by the steady adoption of Augmented Reality Lenses, Spotlight, and AI chatbots, which have enhanced user engagement and creativity on the platform.

Snap is also benefiting from increased engagement with its content and augmented reality (AR) features. In the third quarter of 2025, AR engagement remains strong, with more than 8 billion daily uses of AR lenses and 350 million daily active users engaging with AR experiences.  New AI-powered lenses, such as the Imagine Lens, have further enhanced user creativity and interaction. 

Snapchat’s partnership with Perplexity has been noteworthy. The company recently announced a partnership with Perplexity to integrate its AI-powered answer engine directly into the app’s Chat interface. Starting in early 2026, Snapchat’s nearly 1 billion monthly users will be able to ask questions and get verified, conversational answers powered by Perplexity. This marks Snap’s first major step toward making Snapchat a center for trusted AI-driven discovery and learning.

Price Performance and Valuation of RDDT and SNAP

In the year-to-date period, shares of Reddit gained 20.1% outperforming SNAP, which has plunged 32.2%. The outperformance in Reddit can be attributed to strong ad revenue growth, driven by improved targeting, performance tools, global expansion and increased engagement through search-led initiatives, such as Reddit Answers.

Despite SNAP’s expanding portfolio and partnerships, the company is suffering from continued weakness in brand advertising revenues. Stiff competition has also remained a concern.

RDDT and SNAP Stock Performance

Valuation-wise, RDDT and SNAP shares are currently overvalued, as suggested by a Value Score of F.

In terms of the forward 12-month Price/Sales, RDDT shares are trading at 13.4X, which is higher than SNAP’s 1.92X.

RDDT and SNAP Valuation

How Do Earnings Estimates Compare for RDDT & SNAP?

The Zacks Consensus Estimate for RDDT’s 2025 earnings is pegged at $2.35 per share, which has increased 25.6% over the past 30 days, indicating a 170.57% year-over-year rise.

Reddit Inc. Price and Consensus

Reddit Inc. price-consensus-chart | Reddit Inc. Quote

The Zacks Consensus Estimate for SNAP’s 2025 earnings is pegged at 25 cents per share, which has decreased by a penny over the past 30 days, indicating a 13.79% decline year over year.

Snap Inc. Price and Consensus

Snap Inc. price-consensus-chart | Snap Inc. Quote

Conclusion

While both Reddit and SNAP stand to benefit from the expanding digital advertising market, Reddit offers greater upside potential due to its expanding advertising business and clientele, and an improved user experience with upgraded search and discovery features.

While SNAP stands to gain from digital ad market growth and its AR innovations, the company continues to struggle with weak brand advertising and intense competition. It’s slowing earnings momentum further limits its upside potential.

Currently, Reddit sports a Zacks Rank #1 (Strong Buy), making the stock a stronger pick than Snap, which has a Zacks Rank #4 (Sell). 

You can see the complete list of today’s Zacks #1 Rank stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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