We recently compiled a list of the 10 Hot New Stocks to Buy Now. In this article, we are going to take a look at where Reddit, Inc. (NYSE:RDDT) stands against the other hot new stocks.
According to a report published by EY on January 15, the IPO activity in the United States remained strong in 2024 and is expected to continue at an accelerated pace in 2025. The market made a significant recovery last year. This recovery was both in terms of the number of IPOs and the proceeds raised when compared to 2023. While the number of IPOs increased 38% year-over-year, the proceeds rose 48% during the same time. The report further highlighted that around 20 deals raised more than $500 million, whereas, seven deals stood out by topping $1 billion. During the fourth quarter of 2024 alone, the proceeds almost doubled year-over-year, driven by a single deal that raised $1.7 billion, around 30% of the overall proceeds from Q4 2023.
READ NEXT: 12 Best Internet of Things Stocks To Buy According to Analysts and 10 Worst Performing Bank Stocks in 2024.
During the last year, 176 IPO deals led the total proceeds for the year to $33 billion. The healthcare technology and media and telecommunication sectors were the key leaders for the US IPO activity as these sectors accounted for around 61% and 49% of the overall proceeds. Moreover, companies with advancements in artificial intelligence technology were found to be significant attention gainers among investors. Looking ahead, the report predicts continued growth for the IPO market, with substantial success for companies with proven AI-driven results. In addition, cross-border IPOs also came under the spotlight as they accounted for around 64% of the deals conducted in Q4 2024, with two non-US companies making it to the top 10 largest deals of 2024.
Our Methodology
To curate the list of 10 hot new stocks to buy now we conducted our initial research using the Finviz stock screener. We searched for companies that went public in the last 2 years and then sorted the list by their past 6 months performance. Next, we cross-checked the past 6 months’ performance from Google and the analyst upside potential for each stock sourced from CNN. Lastly, we ranked the stocks based on the number of hedge fund holders as per Insider Monkey’s Q4 2024 database. Please note that the data was collected on February 18, 2025.
Why do we care about what hedge funds do? 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 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A content marketing website showing the audience reach of the company’s products.
Reddit, Inc. (NYSE:RDDT)
6-Months Performance: 244.21%
Analyst Upside Potential: 12.07%
Number of Hedge Fund Holders: 87
Reddit, Inc. (NYSE:RDDT) operates the social media platform called Reddit. This platform is like a digital city where people can create communities and share content based on their interests. The company started trading on the New York Stock Exchange on March 21, 2024, making it a hot new stock to buy now.
Advertisement revenue is one of the primary modes through which the company makes money. During the fiscal third quarter of 2024, Reddit, Inc. (NYSE:RDDT) generated $315.1 million from its advertisement segment, indicating a 56% increase year-over-year. On February 13, John Colantuoni from Jefferies maintained a Buy rating on the stock with a price target of $225. Colantuoni noted that Reddit, Inc. (NYSE:RDDT) has strong potential for revenue growth, especially through advertising. The company has demonstrated significant growth in advertising revenue and Advertising Revenue per Logged-in User (ARPU), exceeding expectations. The analyst expects the company to maintain revenue growth through continued innovation in advertising formats and targeting, as well as diversification of its advertiser base.
Overall RDDT ranks 2nd on our list of the hot new stocks to buy now. While we acknowledge the potential of RDDT as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. 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 Complete List of 59 AI Companies Under $2 Billion in Market Cap.
Disclosure: None. This article is originally published at Insider Monkey.
Hedge Fund Resource Center