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

Reddit RDDT and Meta Platforms META 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, Meta leads the broader social networking space through platforms like Facebook and Instagram.

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 META are expected to benefit from this rapid growth pace.

RDDT or META — Which of these Digital Advertising 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 Dynamic Product Ads, Reddit Pixel, and CAPI. This is driving advertiser adoption and delivering strong performance outcomes. 

In the third quarter of 2025, Advertising revenues surged 74% year over year to $549 million, driven by a combination of expanding relationships with existing advertisers, acquiring new customers, and diversifying its advertiser base across large, mid-market, and SMB businesses.

The company is also benefiting from its investment in AI-powered tools, which are driving the company’s user engagement. In the third quarter of 2025, RDDT reported 116 million daily active users and 444 million weekly active users, both increasing 20% year over year.

In the third quarter of 2025, more than 75 million people searched on Reddit weekly, showcasing the growing popularity of this feature. The company also 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 META Stock

Meta Platforms’ focus on integrating AI into its platforms, which include Facebook, WhatsApp, Instagram, Messenger, and Threads, is driving user engagement to boost ad revenues. 

The company’s focus on integrating AI into its platforms — Facebook, WhatsApp, Instagram, Messenger, and Threads — is driving user engagement to boost ad revenues. Advertising revenues increased 25.6% year over year to $50.08 billion and accounted for 97.7% of third-quarter revenues. At cc, revenues increased 25% year over year.

In third-quarter 2025, improvements in AI-powered recommendation systems have led to a 5% increase in time spent on Facebook and 30% on Threads. In the same quarter, Meta introduced AI tools like video generation, image animation, and AI-generated music to help advertisers optimize their ad creatives and improve performance.

Meta Platforms is seeing increased usage of its AI creative tools. AI is heavily dependent on data, of which META has a trove, driven by its more than 3.54 billion daily users. Meta AI usage continues to increase, which is now available in more than 200 countries and territories.

Price Performance and Valuation of RDDT and META

In the trailing six-month period, shares of Reddit have surged 73.1% while Meta Platforms' stock has lost 7.8%. 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 a robust portfolio and clientele, META is facing challenging macroeconomic conditions, stiff competition, and regulatory headwinds.

RDDT and META Stock Performance

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

In terms of the forward 12-month Price/Sales, RDDT shares are trading at 14.14X, which is higher than META’s 7.03X.

RDDT and META Valuation

How Do Earnings Estimates Compare for RDDT & META?

The Zacks Consensus Estimate for RDDT’s 2025 earnings is pegged at $2.35 per share, which remained unchanged 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 META’s 2025 earnings is pegged at $23.43 per share, which has declined 2.49% over the past 30 days, indicating a 1.80% decline year over year.

Meta Platforms, Inc. Price and Consensus

Meta Platforms, Inc. price-consensus-chart | Meta Platforms, Inc. Quote

RDDT and META’s earnings beat the Zacks Consensus Estimate in all the trailing four quarters. However, RDDT’s average surprise of 192.49% is higher than META’s surprise of 18.85%.

Conclusion

While both Reddit and Meta Platforms stand to benefit from the booming digital advertising market, Reddit offers greater upside potential given its rapid revenue growth, surging advertiser base and expanding engagement tools.

META now expects to invest significantly more over the next few years in developing more advanced models and the world's largest AI services. However, monetization of these AI services will take considerable time, which is a concern. Stiff competition also remains a headwind.

Currently, Reddit sports a Zacks Rank #1 (Strong Buy), making the stock a stronger pick than Meta Platforms, which has a Zacks Rank #3 (Hold). 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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