Reddit (RDDT 3.91%) is one of the fastest-growing social platforms, with 116 million daily active users. It is the third-most-visited site in the U.S., just behind YouTube.
If you have $1,000 to invest, this growth stock could be a rewarding investment that grows in value over the next few decades.
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Why buy Reddit stock
It's a great sign that Reddit's advertising revenue continues to grow at a significantly faster rate than its daily active user base. Reddit is experiencing strong growth, with daily active users increasing by 19% year over year in the last quarter. This translated to an impressive 68% year-over-year increase in advertising revenue, and there's a good explanation for this growth.
"Reddit" is one of the most frequently searched keywords on Alphabet's Google. People are specifically seeking out Reddit to find helpful answers on various topics, including product reviews. This also means Reddit is attracting people who may have high purchase intent when shopping, which is valuable to advertisers. This makes Reddit unique in the social media landscape, and the company is clearly monetizing its user base effectively.
NYSE: RDDT
Key Data Points
Stocks can be volatile from year to year, but over the long term, they tend to track the growth of a company's profits. Analysts expect the company's earnings per share to grow at an annualized rate of 42% in the coming years. This represents more than enough growth to potentially turn a $1,000 investment in Reddit into $2,000 by 2030. If Reddit someday has 1 billion users on its platform, that could spell several thousand dollars in investment value in the coming decades.
