Boston, Massachusetts – Meme stocks are making a comeback, spearheaded by investor Keith Gill, also known as “Roaring Kitty,” who is back on Reddit promoting GameStop. News about this resurgence surfaced following the close of Reddit’s first quarter, showcasing a significant increase in traffic for the company.

Despite a lackluster initial public offering (IPO) in March, Reddit has experienced a remarkable turnaround with a 20% surge in its stock price. This growth is seen as just the beginning of a potential breakout for the company.

One of the reasons driving investor interest in Reddit is its unique social media platform that focuses more on discussions and topics of interest rather than visual content like photos and videos. With approximately 80 million daily active users compared to Meta’s 2 billion, Reddit still presents ample room for growth in the market.

Additionally, Reddit has been exploring new avenues for revenue generation, such as selling data licensing feeds and establishing a user e-commerce ecosystem to diversify its income streams. Despite its current growth trajectory, Reddit is already turning a profit with positive adjusted EBITDA.

As the company’s stock price hovers around $60, its market cap stands at $9.96 billion, with an enterprise value of $8.29 billion factoring in cash reserves. Analysts are optimistic about Reddit’s future, with projected revenues of $1.32 billion for FY25, translating to a valuation multiple of 6.3x EV/FY25 revenue.

Reddit’s first-quarter results showcased a 48% year-over-year revenue increase to $243.0 million, attributed to a rise in users and user engagement despite a slight decline in ad pricing. User growth remains robust, with daily active users growing by 37% year-over-year.

The company’s strong performance in the U.S., with a 45% year-over-year increase in total DAUs, outpacing international markets, highlights Reddit’s domestic growth potential. Despite challenges in ad pricing, higher engagement levels continue to drive up average revenue per user by 8% year-over-year globally.

An important factor contributing to Reddit’s growth is its improved platform speed, enhancing its visibility on Google search rank algorithms. Furthermore, international expansion efforts, including automatic content translations, aim to increase Reddit’s global reach and revenue streams.

With pro forma gross margins around 89%, Reddit has managed to convert top-line growth into profitability, with adjusted EBITDA reaching $10.0 million and a 4% margin – a significant improvement from the previous year. The company’s recent success in user growth, international expansion, and profitability positions it favorably for future growth and market performance.

In conclusion, Reddit’s impressive user growth, international expansion initiatives, faster platform speed attracting more Google traffic, and increasing profitability make it an attractive investment option. While monitoring the company’s growth rates and valuation multiples as it enters the second quarter and beyond is crucial, maintaining a long position in Reddit seems prudent amid its promising trajectory.