We recently published a list of the 11 Best Young Stocks to Buy According to Hedge Funds. In this article, we are going to take a look at where Reddit, Inc. (NYSE:RDDT) stands against other young stocks.
NASDAQ CEO and chair Adena Friedman appeared on CNBC’s ‘Squawk Box’ on April 24 to discuss what to make of the market volatility, as well as the IPO landscape. Friedman reported that NASDAQ achieved 12.5% overall revenue growth in the quarter, with every division posting double-digit increases. Specifically, the index business grew by 26%, which was supported by $27 billion of inflows during the quarter. Half of these inflows were directed into NASDAQ 100 index products, while the other half went into various other indexes offered by NASDAQ. Friedman also acknowledged that the economy entered the year with resilience but faced increasing uncertainty and volatility as the quarter progressed. However, she explained that such environments often drive clients to turn to NASDAQ as the market operator of choice to manage their trading volumes and capital flows. She noted that even amid market value fluctuations, NASDAQ saw inflows into its index products and strong demand for its fintech services.
The discussion also indicated that while short-term market volatility can boost trading activity and liquidity, longer-term IPO prospects depend on broader economic conditions. Friedman said that IPO activity and investor behavior could change more significantly if the economy were to enter an extended recession. But for now, NASDAQ benefits from a strong start to the year and remains a preferred venue for investors to express their views. The conversation then turned to global capital flows, particularly as Chinese sovereign wealth funds may reduce investments in US venture capital and private equity firms. Friedman stated that the capital flows where returns are the strongest. She emphasized that asset owners and managers have ‘fiduciary’ responsibilities to their ultimate beneficiaries and will prioritize returns over the long term. Acknowledging the influence of geopolitical and political factors on investment decisions, Friedman stressed that NASDAQ’s role is to provide the infrastructure that allows capital to flow efficiently regardless of shifts.
Our Methodology
We first used the Finviz stock screener to compile a list of young stocks that went public in the last 3 years. We then selected the 11 stocks that were the most popular among elite hedge funds and that analysts were bullish on. The stocks are ranked in ascending order of the number of hedge funds that have stakes in them, as of Q4 2024.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
A close up of a user’s hand scrolling through a mobile social media application.
Reddit, Inc. (NYSE:RDDT)
Number of Hedge Fund Holders: 87
Reddit, Inc. (NYSE:RDDT) enables users to engage in conversations, explore passions, research new hobbies, and exchange goods and services. 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.
Reddit’s advertising business reached $359 million in Q1 2025, which was up 61% year-over-year and was driven by broad-based strength across objectives, channels, verticals, and geographies. About 40% of this ad revenue came from advertisers focused on building brand awareness rather than direct sales. Notably, active advertisers at Reddit Inc. (NYSE:RDDT) increased by more than 50%.
On May 5, Baird analyst Colin Sebastian raised the price target on the stock to $140 from $125 and maintained a Neutral rating on the shares. Reddit now projects total revenue between $410 million and $430 million for Q2. The company is enhancing its advertising platform to drive further growth. This includes investment in ML and ad formats to improve performance for advertisers and simplify the usability for both advertisers and sales teams through new tools and AI-driven insights.
Reddit Inc.’s (NYSE:RDDT) strong quarterly earnings, user growth, and AI partnership news drove a stock surge, which made it a top performer for the Columbia Threadneedle Global Technology Growth Strategy. The fund stated the following in its Q4 2024 investor letter:
“Reddit, Inc. (NYSE:RDDT) was the single best-performing stock for the fund, as the stock surged during the quarter, with significant outperformance following its stellar quarterly earnings release. The capital-light social news aggregation platform — and the ninth most-visited website in the world — reported quarterly revenue, user growth and profit margins that came in considerably higher than even the most bullish of estimates, and the company also provided forward-looking guidance that came in well ahead of expectations on most metrics. After earlier announcing a data licensing partnership with AI pioneer OpenAI, investors ‘up-voted’ the evolving AI narrative for Reddit after gaining a better understanding of its unique and hard-to-replicate trove of content generated by its growing and increasingly global user base.”
Overall, RDDT ranks 2nd on our list of the best young stocks to buy according to hedge funds. While we acknowledge the growth potential of RDDT, our conviction lies in the belief that AI stocks hold great promise for delivering high returns and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for an AI stock that is more promising than RDDT but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires.
Disclosure: None. This article is originally published at Insider Monkey.