These 3 Social Media Stocks Are Among the Best Bargains in the Market

If you're looking for growth stocks trading at low prices, the social media space has a trio of stocks that look like bargains. Meta Platforms (NASDAQ: META), Pinterest (NYSE: PINS), and Reddit (NYSE: RDDT) are all seeing strong growth, yet they all trade at valuations that don't fully capture the growth these stocks are seeing.

Let's look at why these growth stocks look like they are among the best bargains in the market.

Meta Platforms

The market has punished Meta Platforms for its aggressive spending on AI infrastructure, but the narrative has started to shift, with the company looking to potentially start up a cloud computing operation -- and also with the launch of its Muse Spark 1.1 multimodal reasoning model.

The cloud operation helps answer the question of what happens if Meta overbuilds its AI data center capacity, as there is clearly enough demand for it to sell excess compute capacity at attractive prices to third parties. Meanwhile, its new AI model performs well against other top frontier AI models, showing Meta's efforts are paying off.

Few companies have been as good as Meta at employing AI within their core businesses to drive growth. The company is using AI to constantly improve its recommendation engine to display more relevant content to users and keep them on its platform longer. At the same time, it's using AI to serve them more relevant ads, helping advertisers increase conversions. The result has been strong revenue growth, with both ad impressions and ad prices surging.

Meta also has a strong opportunity ahead with WhatsApp and Threads, as it is just in the early stages of displaying ads on these platforms. With the stock trading at a forward P/E of 20.5 for a company that just grew its Q1 revenue by 33%, Meta looks undervalued with a lot of potential upside.

Image source: The Motley Fool.

Pinterest

Trading at a forward P/E of under 12, Pinterest is one of the cheapest growth stocks in the market. The stock has not gotten credit for the transformation it has undergone under CEO Bill Ready, but the company and Ready have drawn the support of activist investor Elliott Investment Management.

Under Ready, Pinterest has gone from a simple online vision board to a shoppable discovery destination powered by its multimodal AI model. Users can now deploy visual search to find items and buy them directly from Pinterest's platform. Meanwhile, it's embedded AI features across its platform, helping improve curation and personalization. This includes an AI assistant and "more like this" AI-powered recommendations.

Similar to Meta, the company has also brought the use of AI to advertisers, helping them automate marketing campaigns to optimize their ad spending and better convert customers. This helped lead to strong 18% year-over-year (15% in constant currency) revenue growth in the first quarter to over $1 billion.

While Pinterest has more exposure to retail categories that are struggling, like home furnishings, than others in the space, this is a growth stock that is just too cheap.

Reddit

Reddit has been the fastest-growing social media company, with its revenue surging 69% last quarter to $663 million. It was the seventh straight quarter in which it had grown its revenue by more than 60%.

The company is benefiting from introducing new ad formats and increasing ad loads. It's also launched a few new shopping tools to improve its dynamic product ad capabilities. This is still in its early stages but is showing promise. Meanwhile, its AI-powered ad platform, Reddit Max, is helping advertisers both reduce costs per action and increase conversions.

Reddit is seeing rapid growth and is working to improve new user retention and frequency by enhancing its feed quality, onboarding process, and machine learning capabilities. It's also working on improving the overall user experience to improve security and eliminate bots.

Trading at a forward P/E of 22 based on 2027 analyst estimates, this is another cheap social media stock whose valuation does not reflect its current growth.

Geoffrey Seiler has positions in Meta Platforms and Pinterest. The Motley Fool has positions in and recommends Meta Platforms, Pinterest, and Reddit. The Motley Fool has a disclosure policy.