Meta Platforms vs. Reddit: Which Social Media Stock Is the Better Buy

Meta Platforms (NASDAQ: META) and Reddit (NYSE: RDDT) are two of the most well-known social media companies. Meta Platforms has dominated the industry with Facebook, Instagram, and WhatsApp, while Reddit has carved out a unique niche for itself.

Both stocks had rough starts to 2026, and while Meta has mostly recovered, Reddit is still down by more than 20% year to date. However, with both companies scheduled to report earnings before the end of the month, now would be a good time to assess them both and determine which is the better buy.

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Reddit is growing much faster

Reddit has the edge in growth rates. Its compound annual revenue growth rate of 48.9% over the past three years comfortably outpaced Meta Platforms' 19.9% rate over the same stretch.

Reddit's more rapid growth should continue for a while, since it has the advantage of being a far smaller platform. The only issue with operating a set of platforms that reach a cumulative 3.56 billion daily active users (DAUs) is that there aren't as many people left who can become new users of its family of apps.

Reddit is different. It has an impressive 126.8 million DAUs, but it could double its current user base and still have less than 10% of Meta Platforms' DAUs. Smaller companies have more untapped market share, which can produce higher long-term returns for patient investors.

The fact that Reddit saw a 17% year-over-year increase in daily active users compared to Meta's 4% growth rate highlights how much more market share is available to Reddit. Meta Platforms has done a more complete job of saturating its market.

Higher user growth rates have helped Reddit outpace Meta's revenue growth in recent years. Net income has followed the same pattern.

Meta Platforms has more ways to generate revenue

While the current fundamentals favor Reddit, there are a few potential catalysts on Meta's side. Facebook's parent company has the better valuation: Its price-to-earnings (P/E) ratio of 23.5 is superior to Reddit's 51.8 P/E. Reddit's growth rates are better, but a bird in the hand is worth two in the bush.

Furthermore, Meta Platforms has more ways to generate revenue. Its large language model (LLM) and AI glasses offer compelling long-term opportunities, as does the cloud infrastructure segment that it's expected to launch.

Granted, these three initiatives will only account for a small fraction of its total revenue: Meta Platforms is still primarily an online advertising company. However, the steps Meta is taking now could set the stage for growth in other areas, which would provide vital diversification in the event that advertising sales slow down. Reddit doesn't have other meaningful sources of income; data licensing and Reddit Premium subscriptions make up only a small portion of its total revenue.

How much longer can ad revenue remain elevated?

Every high-growth company eventually sees its top-line growth rates decelerate. For instance, Meta Platforms delivered 54% year-over-year revenue growth back in 2016.

Reddit's revenue growth will follow a similar regression over time. As more people either sign up for Reddit or consider it and opt not to create an account, it will become more difficult for the company to achieve high year-over-year growth rates.

Meta has a more attractive valuation, but investors can attribute Reddit's premium to the fact that it's gaining market share more rapidly. Meta Platforms is, relatively speaking, an older and more mature collection of social media platforms. Reddit has more room to run, though the main question with this comparison is how much runway remains for it.

If Reddit can maintain elevated revenue growth rates for multiple years, it will look like the better pick. However, if revenue growth rates decelerate sharply, it will face more pressure on its valuation.

Reddit is guiding for $720 million in second-quarter revenue at the midpoint, which would be a 44% year-over-year improvement. That would be good, but it would also be a meaningful deceleration from its 69% growth rate in Q1. For Reddit to justify a decision to buy it over Meta, it will have to exceed guidance in Q2. If it doesn't deliver that degree of outperformance, I'd say Meta Platforms stock looks more attractive at current levels.

Marc Guberti has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Meta Platforms and Reddit. The Motley Fool has a disclosure policy.