Contrasting Reddit (NYSE:RDDT) and Weibo (NASDAQ:WB)

Weibo (NASDAQ:WB) and Reddit (NYSE:RDDT) are both communication services companies, but which is the superior investment? We will contrast the two businesses based on the strength of their institutional ownership, earnings, risk, profitability, valuation, analyst recommendations and dividends.

Valuation & Earnings

This table compares Weibo and Reddit”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Weibo	$1.78 billion	1.12	$449.02 million	$1.43	5.69
Reddit	$2.20 billion	12.95	$529.72 million	$4.30	34.46

Reddit has higher revenue and earnings than Weibo. Weibo is trading at a lower price-to-earnings ratio than Reddit, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a breakdown of recent ratings for Weibo and Reddit, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Weibo	2	0	2	0	2.00
Reddit	0	11	19	2	2.72

Weibo currently has a consensus price target of $11.90, indicating a potential upside of 46.26%. Reddit has a consensus price target of $220.90, indicating a potential upside of 49.09%. Given Reddit’s stronger consensus rating and higher possible upside, analysts plainly believe Reddit is more favorable than Weibo.

Profitability

This table compares Weibo and Reddit’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Weibo	21.15%	9.90%	5.52%
Reddit	31.35%	29.97%	27.22%

Insider and Institutional Ownership

68.8% of Weibo shares are held by institutional investors. 41.3% of Weibo shares are held by insiders. Comparatively, 28.5% of Reddit shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Risk and Volatility

Weibo has a beta of 0.21, meaning that its stock price is 79% less volatile than the S&P 500. Comparatively, Reddit has a beta of 2.04, meaning that its stock price is 104% more volatile than the S&P 500.

Summary

Reddit beats Weibo on 13 of the 15 factors compared between the two stocks.

About Weibo

Weibo Corporation, through its subsidiaries, operates as a social media platform for people to create, discover, and distribute content in the People’s Republic of China. It operates in two segments, Advertising and Marketing Services; and Value-Added Services. The company offers discovery products to help users discover content on its platform; self-expression products that enable its users to express themselves on its platform; and social products to promote social interaction between users on its platform. It also provides advertising and marketing solutions, such as social display advertisements; and promoted marketing offerings, such as Fans Headline and Weibo Express promoted feeds, as well as promoted trends and search products that appear alongside user’s trends discovery and search behaviors. In addition, the company offers products, such as trends, search, video/live streaming, and editing tools; content customization, copyright contents pooling, and user interaction development; and search list recommendation, trends list recommendation, and Weibo app opening advertisements. Further, it provides back-end management, traffic support, and product services for better displaying and promotion of its account and content; open application platform for other app developers that allows users to log into third-party applications with their Weibo account for sharing third-party content on its platform; and Weibo Wallet, a product that enables platform partners to conduct interest generation activities on Weibo, such as handing out red envelops and coupons. The company was formerly known as T.CN Corporation and changed its name to Weibo Corporation in 2012. The company was founded in 2009 and is headquartered in Beijing, the People’s Republic of China.

About Reddit

Reddit, Inc. operates a website that organizes digital communities. 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. The company was founded in 2005 and is headquartered in San Francisco, California.