Owning Reddit can be valuable if you’re okay with some ups and downs, according to Jim Cramer.

Reddit’s Future: Jim Cramer’s Take

After Reddit’s stock rose over 11% on Wednesday, CNBC’s Jim Cramer shared his optimistic views on the company’s prospects. He suggested that investors consider buying Reddit, but only if they can handle substantial risks.

“I believe Reddit is a buy at these levels. Even with today’s significant gains, the inherent volatility still makes it a worthwhile investment,” he noted. Cramer pointed out the unpredictable nature of the market, mentioning that one stray tweet could easily impact sentiment.

Despite the gains, Cramer maintained there are still buying opportunities, especially since the stock has dropped considerably from its peak in February.

Although Reddit’s inventory didn’t see an uptick after reporting revenues in early May, Cramer was impressed by the results. The company not only exceeded Wall Street’s expectations but also offered optimistic guidance.

He argued that concerns regarding Reddit’s ability to drive quarterly results and sustain user growth are overstated. Management has adopted a more conservative approach to user projections for the near future, especially in light of evolving search algorithms from platforms like Google.

“Reddit was the sixth most searched term on Google recently, following major news topics. This indicates our relevance in the media landscape,” Reddit CEO Steve Huffman said during an earnings call.

Cramer noted positive signs in Reddit’s advertising sector. Despite general worries on Wall Street about a potential economic slowdown affecting advertising, Reddit reported a year-on-year growth of over 50% among aggressive advertisers during the quarter. Huffman also mentioned that roughly 40% of discussions on Reddit have commercial intent. The company is poised to explore profitable revenue streams, especially with advancements in AI technology.

Cramer referred to Reddit as a unique platform where genuine interactions thrive amidst the prevalence of bots on social media. He described Reddit as maintaining an “old school internet feel,” noting that users can access content without the need for an account.