Reddit’s Volatile Rebound: Jim Cramer Makes the Bull Case

Reddit, the social media company famous for its user-driven message boards and “old-school internet vibe,” is drawing fresh attention from Wall Street. Jim Cramer, the well-known host of CNBC’s “Mad Money,” has gone on record saying, “I think Reddit is worth buying at this level”—despite the company’s wild stock swings and ongoing skepticism from some market watchers. Here’s a deep dive into the numbers, the narrative, and why Cramer sees opportunity amid turbulence.

Listen to our conversation on ‘Reddit’s Financial Surge’ …

A Stunning Quarter, Muted Reaction

Reddit’s recent earnings report delivered eye-popping results. The company posted 61% year-over-year revenue growth, far outstripping a 19% rise in expenses. That tight cost control translated into real profits: Reddit earned $0.13 per share, well above Wall Street’s $0.02 per share estimate, marking its third consecutive unadjusted profitable quarter. In the current environment, with ad budgets in flux and most digital companies bracing for a slowdown, such results would usually send a stock higher.

Instead, Reddit’s shares—after an initial post-earnings pop—ended down over 4% in the next session. “These guys delivered a phenomenal top and bottom line beat… but the stock didn’t get any credit for it at all. It was in the Rodney Dangerfield zone. It got no respect,” Cramer said on CNBC. He called out the market’s fixation on decelerating revenue growth: while 61% growth was down from 71% the previous quarter, it remains exceptional by any industry standard.

User Growth Remains Robust

Analysts also fretted about Reddit’s user metrics. Daily and weekly active users grew 31% year-over-year in Q1, but executive commentary suggested April’s daily active user growth was in the “high teens” on an annualized basis—a sign of possible deceleration. Cramer dismissed these concerns as overblown, emphasizing that “most companies would kill for that growth.” He also noted that Reddit remains a global powerhouse: it’s one of the top ten most visited websites worldwide and the sixth most searched word on Google, according to management commentary via CNBC.

Navigating Google’s Algorithm Shifts

A recurring concern for Reddit—and any web-based business—is its reliance on Google for traffic. Algorithm changes, such as the recent introduction of AI-generated answers in search results, have impacted the number of users funneled toward Reddit’s open forums. Cramer, who has helmed web businesses himself, acknowledged the risks but argued that Reddit has more “organic draws” than most: “Reddit remains one of the last major platforms that doesn’t require you to sign in to learn something.” This platform openness, he believes, will help mitigate shifts in the search ecosystem.

Monetization Momentum

On the commercial front, Reddit is making rapid progress. Active advertisers climbed more than 50% from a year ago, with sectors like pharma, auto, telecom, and finance leading the way. Management highlighted during its earnings call that 40% of Reddit’s conversations are commercial in nature, reinforcing the platform’s value to advertisers. New product initiatives are taking off: “dynamic product ads” are already showing 90% higher return on ad spend compared to last year’s campaigns.

AI and International Expansion: The Next Growth Vectors

Reddit’s data licensing deals—such as those with OpenAI—are another emerging revenue stream. By granting access to its vast archive of user discussions, Reddit is tapping into the AI “pot of gold,” as Cramer put it, supplying invaluable training material for next-generation language models. The company is also pushing internationally, with ad revenue outside the U.S. surging 83% year-over-year and machine translation tools now supporting 13 languages. Notably, Reddit’s average revenue per international user ($1.34) is far behind its U.S. figure ($6.27), indicating ample room for monetization growth.

Valuation and Analyst Sentiment

Even after a sharp pullback from its February highs, Reddit trades at about 54 times next year’s earnings. Far from excessive, says Cramer—especially given projected 85% earnings growth next year. Wall Street is leaning bullish, too: MarketBeat reports an average 12-month price target of $140.35, with a “Buy” consensus among professional analysts. StockAnalysis and Public.com similarly show 12-month targets in the $138–$147 range, suggesting 17–20% upside from current levels.

The Long-Term Bet

Cramer’s bottom line: Reddit is a buy, but investors need “intestinal fortitude”—volatility is guaranteed. The company’s unique blend of authentic user content, fast-growing ad business, and AI data licensing, all set against a reasonable valuation, make Reddit a compelling story for those who can stomach the ride. As Cramer told his viewers via CNBC, “Stocks like these are only worth owning if you can stomach some serious volatility… but I think Reddit’s absolutely worth buying at these levels.”