Reddit (NYSE:RDDT – Get Free Report) and Meta Platforms (NASDAQ:META – Get Free Report) are both large-cap communication services companies, but which is the better business? We will contrast the two companies based on the strength of their institutional ownership, earnings, valuation, profitability, dividends, risk and analyst recommendations.
Analyst Ratings
This is a breakdown of recent recommendations and price targets for Reddit and Meta Platforms, as provided by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| 0 | 10 | 17 | 2 | 2.72 | |
| Meta Platforms | 0 | 8 | 47 | 3 | 2.91 |
Reddit presently has a consensus price target of $219.29, indicating a potential upside of 51.97%. Meta Platforms has a consensus price target of $833.12, indicating a potential upside of 29.64%. Given Reddit’s higher possible upside, analysts clearly believe Reddit is more favorable than Meta Platforms.
Institutional & Insider Ownership
79.9% of Meta Platforms shares are held by institutional investors. 28.5% of Reddit shares are held by insiders. Comparatively, 13.5% of Meta Platforms shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.
Earnings & Valuation
This table compares Reddit and Meta Platforms”s gross revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| $2.20 billion | 12.60 | $529.72 million | $4.30 | 33.56 | |
| Meta Platforms | $200.97 billion | 8.15 | $60.46 billion | $26.55 | 24.20 |
Meta Platforms has higher revenue and earnings than Reddit. Meta Platforms is trading at a lower price-to-earnings ratio than Reddit, indicating that it is currently the more affordable of the two stocks.
Volatility & Risk
Reddit has a beta of 2.05, indicating that its share price is 105% more volatile than the S&P 500. Comparatively, Meta Platforms has a beta of 1.19, indicating that its share price is 19% more volatile than the S&P 500.
Profitability
This table compares Reddit and Meta Platforms’ net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| 31.35% | 29.02% | 26.32% | |
| Meta Platforms | 31.15% | 30.73% | 18.08% |
Summary
Meta Platforms beats Reddit on 8 of the 15 factors compared between the two stocks.
About Reddit
Reddit, Inc. operates a website that organizes digital communities. It organizes communities based on specific interests that enable users to engage in conversations by sharing experiences, submitting links, uploading images and videos, and replying to one another. The company was founded in 2005 and is headquartered in San Francisco, California.
About Meta Platforms
Meta Platforms, Inc. engages in the development of products that enable people to connect and share with friends and family through mobile devices, personal computers, virtual reality headsets, and wearables worldwide. It operates in two segments, Family of Apps and Reality Labs. The Family of Apps segment offers Facebook, which enables people to share, discuss, discover, and connect with interests; Instagram, a community for sharing photos, videos, and private messages, as well as feed, stories, reels, video, live, and shops; Messenger, a messaging application for people to connect with friends, family, communities, and businesses across platforms and devices through text, audio, and video calls; and WhatsApp, a messaging application that is used by people and businesses to communicate and transact privately. The Reality Labs segment provides augmented and virtual reality related products comprising consumer hardware, software, and content that help people feel connected, anytime, and anywhere. The company was formerly known as Facebook, Inc. and changed its name to Meta Platforms, Inc. in October 2021. The company was incorporated in 2004 and is headquartered in Menlo Park, California
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