Jim Cramer Says “Buy Reddit” (RDDT)

On September 17, CNBC's Mad Money host Jim Cramer expressed his enthusiasm for Reddit, Inc. (RDDT) during a live broadcast. Addressing a caller's concern about the stock's recent performance, Cramer stated: "Alright, my take is that this is a $29 billion company. I think that there are companies that would pay $40 billion for just the book of business they have and be able to train all their different viewers and readers.

Buy Reddit, period, end of story." He then highlighted Reddit's impressive financial growth, citing a 61% year-over-year increase in revenue to $805 million, a 64% rise in advertising revenue to $762 million, and an adjusted EBITDA that more than doubled to $343 million. Cramer further noted that daily active users had grown by 18% to 130.3 million, while weekly active users increased by 24% to 514.6 million.

Reddit's CEO, Steve Huffman, echoed Cramer's bullish outlook during a September 8 appearance at the Goldman Sachs Communacopia + Technology Conference. Huffman emphasized Reddit's commitment to growing its user base, stating, "What is most valuable to Reddit is bringing users into the Reddit ecosystem. We want to grow our direct user base. That is where our business lives." He also discussed efforts to convert mobile-web users into app users and Reddit's focus on the company's direct user base.

Cramer concluded by acknowledging Reddit's strong valuation, with a market cap of approximately $29.4 billion and a forward P/E ratio of 23.31. He also touched upon the company's heavy investment in its product, noting that its feed technology is roughly 12 to 18 months behind the state of the art, and improving the feed is a top priority over the next 12 to 18 months.

The article concludes with Cramer's focus on Reddit's audience and data as a potential asset for a strategic buyer, while also mentioning that some AI stocks may offer greater upside potential with less downside risk.