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Reddit (RDDT -3.39%) has had a bad year. Its stock is down by more than 30% year-to-date, making it one of the worst-performing stocks in the S&P 500.

However, that doesn't mean Reddit is doing poorly as a company. In fact, now looks like a good buying opportunity. Reddit's year-to-date performance does not align with its fundamentals.

Image source: Getty Images.

Reddit's financials are soaring A lagging stock price does not always indicate poor fundamentals, and Reddit is a good example. The social media company's revenue soared by 61% year over year in its second quarter. Net income also almost tripled year over year.

These aren't one-off results, either. This was Reddit's eighth consecutive quarter of delivering more than 60% year-over-year revenue growth. Reddit is making some money by letting artificial intelligence training companies use its data, but almost all of its revenue still comes from online ads.

Its advertising segment was up 64% year over year, and accounted for roughly 95% of Reddit's total revenue. Growth and rising margins enabled Reddit to repurchase $235 million in shares in the quarter.

This growth is built on more users joining the platform An 18% year-over-year boost in daily active users demonstrates that the current momentum is sustainable. Some companies scramble to raise advertising costs and set fees to achieve higher revenue growth as user growth declines. However, a user base built on healthy growth makes it easier for Reddit to realize high growth rates without penny-pinching its advertisers.

It's not just daily active users that are on the upswing, either. Reddit closed the quarter with 514.6 million weekly active users, which was a 24% year-over-year increase.

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Reddit trades at a 30.5 forward P/E ratio, which isn't too far off from Meta Platforms' (META -0.98%) 19 forward P/E ratio when considering their fundamental progress. Meta Platforms delivered only 28% year-over-year revenue growth and a 3% year-over-year uptick in daily active users.

Reddit already trades at a premium to Meta Platforms, but it's fair to argue that Reddit may deserve a higher premium. Its net income is also growing at a much faster rate than Facebook's parent company, implying that its forward P/E ratio will quickly become more attractive than its current level.

U.S. revenue is still growing at a fast rate Another big advantage Reddit has over most social media platforms is that its U.S. user base is still growing at a respectable rate. The U.S. is the most lucrative region for online platforms, including Reddit, as seen in Reddit's financial results.

Reddit has an average revenue per user of $11.85 in the U.S., compared to a $2.26 ARPU in the rest of the world. Furthermore, U.S. ARPU was up 51% year over year, compared with 31% year-over-year growth in its international ARPU.

It has also become common for companies to report higher user and revenue growth rates in international regions than in the U.S., where markets are more saturated. However, Reddit is still delivering respectable U.S. results, with U.S. weekly active users up 9% year over year, and the international figure up 24%. Q2 was a soft spot for Daily Users in America due to "choppy" search referrals, but Reddit has seen these challenges before.

Reddit is achieving higher U.S. growth numbers than Meta Platforms' global numbers. It demonstrates Reddit still has more market share to tap into, while Meta Platforms has fewer new customers it can add to its family of apps.

International revenue is still up more than U.S. revenue, since Reddit is attracting more users from different regions. Eventually, Reddit will lean more heavily into international opportunities to drive higher revenue growth. However, with U.S. activities still playing a critical role and growing at an exceptional rate, Reddit looks poised to rebound from its lows.

Andrew Vollero, the chief financial officer of Reddit, Inc. (RDDT -0.62%), disposed of 10,319 shares of Class A Common Stock on August 20, according to an SEC Form 4 filing.

Transaction summaryMetricValueTransaction value$1.6 millionShares sold (direct)10,319Post-transaction shares (directly held)233,889Post-transaction value$35.16 millionTransaction value based on SEC Form 4 weighted average sale price ($151.71); post-transaction value based on the August 20 market close ($150.31).

Key questionsWhat was the specific nature of this share disposition?
The sale was non-discretionary, executed to cover tax obligations following a vesting event, and does not reflect the insider's view on the stock. These automated "sell-to-cover" arrangements are common among executives receiving equity-based compensation to manage the immediate fiscal impact of newly vested shares.What is the executive's remaining direct equity exposure?
Vollero maintains significant exposure to the company's performance through the direct ownership of 233,889 shares of Class A Common Stock. This remaining position represents 96% of his holdings prior to this filing, indicating a high level of continued equity alignment despite the tax-related disposition.How has the stock performed leading up to this transaction?
As of the August 20 transaction date, shares were priced at $150.31, reflecting a one-year return of -31%. While the transaction occurred during a period of negative 12-month momentum, the non-discretionary nature of the tax withholding means the timing was dictated by the vesting schedule rather than market conditions.What is the broader context of Reddit's business operations?
Reddit operates a San Francisco-based platform for diverse online communities organized by interest, facilitating dialogue through content sharing and direct engagement. The company currently maintains a market capitalization of $29.5 billion, supported by trailing-12-month revenue of $2.8 billion and net income of $871.1 million.Company OverviewMetricValueShare Price (as of market close 2026-08-21)$153.29Market Capitalization$29.5 billionRevenue (TTM)$2.8 billionNet Income (TTM)$871.1 millionCompany SnapshotReddit operates a community-driven internet platform that generates revenue through advertising, premium subscriptions, and API licensing, enabling users to engage in discussions, share content, and participate in thousands of specialized communities organized by shared interests.The company monetizes its user-generated content ecosystem primarily through targeted advertising placements and Reddit Premium subscriptions, while also licensing its data and API access to enterprise clients seeking consumer insights and research capabilities.Reddit's primary audience consists of global internet users spanning diverse demographics, with particular strength among younger audiences and professional communities, while enterprise customers include advertisers, market researchers, and technology companies seeking engagement and data access.Reddit is a leading community-driven content platform with 2,555 employees and a market capitalization of $29.5 billion, generating $2.8 billion in TTM revenue with $871.1 million in net income. The company's competitive advantage derives from its highly engaged user base, authentic peer-to-peer interactions, and the aggregated knowledge contained within its communities, positioning it as a valuable destination for both consumer engagement and enterprise data applications. Reddit's business model leverages network effects and community-driven content creation to maintain a defensible moat in the digital media and information services landscape.

What this transaction means for investorsVollero gave up 10,319 shares to cover taxes on a vest, trimming about 4% of his direct holdings, and his own guidance says more of this is apparently coming. He told investors on the company's latest earnings call, on July 30, that stock-based compensation and related taxes would run $140 million to $155 million in the third quarter as older grants priced at lower levels vest and are refreshed at higher ones, which puts more filings like this one on the calendar.

Meanwhile, Reddit put $235 million into buybacks last quarter at an average of roughly $157.57 a share, above where these shares changed hands, and operating cash flow crossed $1 billion on a trailing basis for the first time, so the money is there. The harder question is where it goes. "User acquisition spending needs stronger attention to improve returns," Vollero said on the same call, and Morgan Stanley trimmed its price target to $210 from $240 on Friday after the fact. Whether the rest of the repurchase authorization gets spent down at these prices is the clearest read on how management values its own stock from here.

Jonathan Ponciano has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Reddit. The Motley Fool has a disclosure policy.

Key Takeaways Alphabet's Q2 Google ad revenues rose 14.4% to $81.63B, led by Search and YouTube growth. Gemini-powered AI Max has 500,000 advertisers and delivers 15% more conversions or value on average. Alphabet faces tougher Q3 Search comparisons and an FX headwind, but Gemini and YouTube remain supports. Alphabet (GOOGL - Free Report) is benefiting from strong momentum across its advertising business, supported by continued growth in Google Search and YouTube and deeper integration of Gemini across its ad infrastructure. This strength reinforces Alphabet’s competitive position in digital advertising against Reddit (RDDT - Free Report) and Meta Platforms (META - Free Report) .

Google advertising revenues increased 14.4% year over year to $81.63 billion in the second quarter of 2026. Google Search & other revenues jumped 17% to $63.27 billion, while YouTube advertising revenues increased 13% to $11.06 billion. Retail and finance were the biggest contributors to Search growth, while direct response and brand advertising supported YouTube.

Alphabet’s growing use of Gemini across its advertising infrastructure remains a key catalyst. Gemini helps understand longer and more detailed searches. In the second quarter of 2026, shopping ads achieved a 20% improvement in showing highly relevant advertisements. AI Max has already been adopted by 500,000 advertisers, with AI-powered campaigns generating an average 15% more conversions or value at a similar return on ad spend.

YouTube further strengthens GOOGL’s competitive position against Reddit and Meta Platforms through its combination of connected TV, Shorts, creators and direct-response advertising. Continued innovation in AI-driven targeting, shoppable formats and Search monetization should help Alphabet capture a greater share of advertising budgets despite intense competition.

Alphabet expects AI-driven improvements in Search to continue supporting user and advertiser experiences. However, third-quarter growth will face tougher Search comparisons and a slight foreign-exchange headwind, particularly across Search and YouTube ads. Despite the headwinds, continued Gemini integration, rising Search engagement and expanding YouTube monetization are expected to support advertising growth and help GOOGL compete effectively with RDDT and META.

How Competitors Fare Against GOOGLDespite Alphabet’s expanding portfolio, the company faces stiff competition from Reddit and Meta Platforms. Both companies are expanding their footprint in the rapidly growing digital ad market.

Reddit is benefiting from strong demand in its advertising business, which has become a key growth driver of the company’s impressive financial performance and future growth prospects. In the second quarter of 2026, Reddit’s advertising revenues grew 64% year over year to $762 million, outpacing even its impressive total revenue growth of 61%. This growth is broad-based, with strength across various sales channels, including large customers, mid-market and small and medium-sized businesses.

Meta’s strong growth in its advertising business has been noteworthy. In the second quarter of 2026, Meta reported $59.4 billion in ad revenues, up 27% year over year, with a 14% increase in ad impressions and a 12% rise in average price per ad. This growth is underpinned by Meta’s ability to deliver highly engaging experiences across its platforms, which include Facebook, Instagram, WhatsApp and Threads.

GOOGL’s Share Price Performance, Valuation & EstimatesAlphabet shares have risen 9.3% year to date, underperforming the broader Zacks Computer and Technology sector’s growth of 15.4%.

GOOGL Stock Performance
Image Source: Zacks Investment Research

GOOGL stock is trading at a premium, with a forward 12-month price/sales of 8.31X compared with the broader Computer and Technology sector’s 6.32X. Alphabet has a Value Score of D.

GOOGL Valuation
Image Source: Zacks Investment Research

The Zacks Consensus Estimate for 2026 earnings is pegged at $20.51 per share, which has increased 1.73% over the past 30 days. This suggests 89.73% growth from 2025’s reported figure.

Alphabet currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Reddit recently said it would bring most viral stories to life through a new “video Reddit” experience, allowing users to listen to Reddit posts in the background while doing other tasks and activities. On Monday, Reddit will begin testing an initial version of this experience with both video and audio posts across select communities to see which type of posts resonate with its users and have the potential to scale.

The company announced its plans for narrated Reddit videos during its second-quarter earnings call in July, when CEO Steve Huffman told analysts on the quarterly call that people were already consuming Reddit content like this on other platforms.

He was referring to how other social media platforms, like TikTok and Meta’s Reels, often feature popular Reddit stories narrated through a text-to-speech feature or read aloud by creators. Some of those videos display the words on screen as they’re read or are accompanied by unrelated footage, like video gameplay or cooking content.

Screenshot of TikTok’s Reddit storiesImage Credits:TikTok screenshot “There is an emerging content type elsewhere on the internet of, basically, podcasts where people read Reddit content,” Huffman explained on the call. “I think this version of, like, listened-to or spoken Reddit can be really engaging, as well,” he added.

Reddit tells TechCrunch the initial tests are early, limited experiments meant to provide the company with a better understanding of how these formats can be useful to users, and whether they can be done in a way that feels authentic to Reddit. Users will be able to choose whether they want to “read” or “play” a post, when available.

The test will focus only on select English-language posts for the time being, and will be accessible through Reddit’s iOS and Android apps.

The different formats will not replace the original, text-only post, Reddit notes. Both the original post and the comments can still be viewed and engaged with as before. Instead, Reddit suggests that people may sometimes want to listen to Reddit audio while exercising, walking, or running errands, while others might want to watch written conversations come to life through video and audio combined.

This isn’t the first time Reddit has experimented with video. The company in earlier years rolled out native video hosting and tried various iterations of a TikTok-style video feed. More recently, Reddit launched support for video in comments, which it says now accounts for more than 10% of video posts on its platform.

When you purchase through links in our articles, we may earn a small commission. This doesn’t affect our editorial independence.

Sarah has worked as a reporter for TechCrunch since August 2011. She joined the company after having previously spent over three years at ReadWriteWeb. Prior to her work as a reporter, Sarah worked in I.T. across a number of industries, including banking, retail and software.

You can contact or verify outreach from Sarah by emailing [email protected] or via encrypted message at sarahperez.01 on Signal.

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SAN FRANCISCO--(BUSINESS WIRE)--Reddit, Inc. (NYSE: RDDT) will join the S&P 500 index, effective prior to market open on Tuesday, August 18th. Its addition to the S&P 500 underscores Reddit’s value, sustained performance as a public company, and its 1-of-1 financial model, highlighted by a rare combination of growth and best-in-class profit and cash flow margins.

“We’re proud to be added to the S&P 500, recognizing the growth, momentum, and consistency we’ve established as a public company,” said Drew Vollero, Reddit’s Chief Financial Officer. “Reddit’s raw materials are special, and there is so much potential to continue building great products and scaling profitably. Our focus remains on executing against the many opportunities ahead.”

Reddit’s differentiated model is powered by deeply engaged communities and authentic human conversation. As one of the most visited websites in the U.S. and the world, Reddit plays an increasingly important role in the AI ecosystem as more people seek real information and human perspectives. Its platform is an ever-growing corpus of 26+ billion posts and comments that capture human experiences across nearly every topic.

Reddit’s inclusion in the S&P 500 is an off-cycle index change prompted by the acquisition of a current S&P 500 constituent. With this change, Reddit will be recognized as one of the ~500 largest and most influential public companies in the U.S., and is one of the fastest-growing companies in the S&P 500.

For more information on the S&P 500 Index and index reconstitution, please visit www.spdji.com.

About Reddit

Reddit is a community of communities. Built on shared interests and passions, it is home to the most open and authentic conversations online. Every day, millions of people post, vote, comment, and search for answers across nearly every topic imaginable, and brands build trusted relationships with their audiences. With 26+ billion posts and comments and more than 130 million daily active uniques, Reddit is one of the internet’s largest sources of information. Learn more at www.redditinc.com. The Reddit app is available on the App Store and Google Play.

About S&P Dow Jones Indices

S&P Dow Jones Indices is the largest global resource for essential index-based concepts, data and research, and home to iconic financial market indicators, such as the S&P 500® and the Dow Jones Industrial Average®. More assets are invested in products based on our indices than products based on indices from any other provider in the world. Since Charles Dow invented the first index in 1884, S&P DJI has been innovating and developing indices across the spectrum of asset classes helping to define the way investors measure and trade the markets.

S&P Dow Jones Indices is a division of S&P Global (NYSE: SPGI), which provides essential intelligence for individuals, companies, and governments to make decisions with confidence. For more information, visit www.spdji.com.

More News From Reddit, Inc.

Back to Newsroom

Key Takeaways Reddit's ad revenues jumped 64% to $762 million, marking its eighth straight quarter of 60% growth. Reddit Max usage rose more than 60%, while revenues from Max campaigns surged more than 150% in Q2 2026. Scaled channel revenues doubled, while active advertisers grew more than 70% in the second quarter. Reddit (RDDT - Free Report) is benefiting from a unique position in the digital advertising landscape, especially as it strengthens its ad game against major competitors like Meta Platforms (META - Free Report) (Facebook/Instagram) and Snap (SNAP - Free Report) .

A major driver of Reddit’s advertising success is its robust financial and user growth. In the second quarter of 2026, Reddit achieved its eighth consecutive quarter of more than 60% revenue growth, with advertising revenues rising 64% year over year to $762 million. The platform now reaches more than 0.5 billion people weekly, including more than 130 million daily users. Notably, new app user retention improved 50% year over year, indicating that product enhancements are translating into deeper engagement and higher-quality user growth.

Reddit’s innovation in its ad stack is another key factor in strengthening its competitive edge against Meta Platforms and Snap. The launch and rapid adoption of Reddit Max, an AI-driven suite for ad automation and optimization, has delivered significant results. Advertiser usage of Max grew more than 60% from the first quarter, and revenues from Max campaigns increased by more than 150%. Features like tailored creatives and dynamic product ads are helping brands achieve better outcomes, such as Lenovo’s 40% higher purchase value with Max campaigns compared to standard campaigns.

The company is also expanding its advertiser base and ecosystem, making it easier for businesses of all sizes to succeed on Reddit. Scaled channel revenues, which include mid-market and SMBs, doubled year over year, and active advertisers grew more than 70% in the second quarter of 2026. Integrations with platforms like Shopify and a growing ads API ecosystem are streamlining onboarding and campaign management, further fueling Reddit’s commercial momentum.

With ongoing investments in product innovation, user experience and ad technology, Reddit is poised to capture more advertising dollars and further strengthen its position against Meta Platforms and Snap in the digital ad market. For the third quarter of 2026, management expects revenues between $860 million and $870 million, representing 47% to 49% year-over-year growth. The midpoint implies about 48% year-over-year growth.

How Competitors Fare Against RDDTDespite Reddit’s expanding portfolio, the company faces stiff competition from Meta Platforms and Snap. Both Meta Platforms and Snap are also expanding their footprint in the rapidly growing digital ad market.

Meta Platforms is benefiting from strong advertising demand and improving monetization. In the second quarter of 2026, advertising revenues rose 27% year over year to $59.36 billion, reflecting healthy engagement, user growth, and ad load optimization across Meta Platforms’ services. Ad impressions increased 14% year over year, while the average price per ad advanced 12%.

Snap’s strong advertising revenue has been a major growth driver for the company. In the second quarter of 2026, Snap’s advertising revenues rose 9% year over year to $1.28 billion, reflecting improved momentum with large advertisers in North America, broader adoption of the company’s AI-powered Smart Campaign Solutions and continued strength among small and medium-sized businesses.

RDDT’s Share Price Performance, Valuation and EstimatesRDDT shares have plunged 32.1% year to date, underperforming the broader Zacks Computer & Technology sector’s 17.7% appreciation and the Internet - Software industry’s 1.8% decline.

RDDT Stock Performance
Image Source: Zacks Investment Research

RDDT shares are overvalued, with a forward 12-month Price/Sales of 7.42X compared with the Computer & Technology sector’s 6.54X. RDDT has a Value Score of D.

RDDT Valuation
Image Source: Zacks Investment Research

The Zacks Consensus Estimate for 2026 earnings is pegged at $5.22 per share, which has been unchanged over the past 30 days. This suggests 8.07% year-over-year growth.

RDDT currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Imagine a company that reports eight straight quarters of 60% revenue growth, beats its earnings-per-share (EPS) estimates by 30%, and raises its next quarter guidance above Wall Street estimates. You might expect the stock to soar 20% following that release, right?

Well, that’s exactly what Reddit Inc. NYSE: RDDT reported to the market last week, and the stock didn’t gain 20%; it dropped 20% the following morning. The EPS and revenue figures masked a concerning decline in U.S. metrics, prompting a swift re-rating from both analysts and investors. Can Reddit stem this user deterioration without losing its monetization success?

Get Reddit alerts:

Headline Numbers Hide User Growth SlowdownReddit reported its Q2 2026 results on July 30 and beat EPS and revenue expectations in smashing fashion. Revenue grew 61% year-over-year (YOY) to a record $805 million, surpassing analysts’ consensus by nearly 10%. EPS of $1.25 also beat estimates by over 30%, and adjusted EBITDA margins reached 43%.

A clean top and bottom line beat, plus management forecasts another record quarter in Q3 with top-end revenue guidance of $870 million and 45% adjusted EBITDA margins.

Reddit Today

$160.08 +5.37 (+3.47%)

As of 02:42 PM Eastern

This is a fair market value price provided by Massive. Learn more.

52-Week Range$119.27▼

$282.95P/E Ratio37.22

Price Target$220.90

The numbers under the hood also looked impressive. Advertising revenue jumped 64% to $762 million, and the number of global daily active unique users (DAUq) grew to 130.3 million, representing YOY growth of 18%. Operating cash flow also surpassed $1 billion on a trailing 12-month basis for the first time ever. And yet the stock dropped 22% following the report, so in the words of Ted Lasso: "Why the decline, Frankenstein?”

The key metric wasn’t global unique users, but U.S. users, which dipped slightly to 53.2 million in Q2 from 53.5 million in Q1. Reddit (for now) splits its user base into two categories: logged-in and logged-out. Logged-in users are the ones who download the app, create accounts, post, get into meme wars, and engage in other activities that can be monetized. Logged-out users come from search traffic (e.g., Google) and typically read an article or a comment chain before moving on. And despite total U.S. users growing from 50.3 million to 53.2 million YOY, the logged-in user base is flat:

Q2 2025: 22.9M logged in

Q3 2025: 23.1M logged in

Q4 2025: 23.0M logged in

Q1 2026: 23.2M logged in

Q2 2026: 23.1M logged in

Logged-in users growth has plummeted to 1% YOY, which is not the direction a management team with aspirations for 100 million daily U.S. users wants to see the numbers turn. This is also the last quarter management will report the logged-in/logged-out split.

Daily User Monetization Quantifies Bull CaseThe decision to retire the differentiated metrics might seem curious considering the slowdown in active user growth. The logged-in vs. logged-out difference is important because logged-in U.S. users are the most easily monetized group on Reddit. And if this group’s growth is stagnating, Reddit will need to increase the revenue it generates per user. The company earned $638 million in U.S. revenue in Q2 2026 from 53.2 million total DAUq, which puts U.S. average revenue per user (ARPU) at $11.85 in the period. And while logged-out users do create ad impressions, the majority of this revenue comes from the logged-in users.

Fortunately for Reddit, the decision to combine user metrics (which should be noted was announced months ago) appears prudent, given the company’s ability to monetize its most active users. Despite flat logged-in user growth, revenue continues to increase, which means Reddit is getting better at extracting dollars from its most dedicated users. Strip out the less valuable logged-out users, and U.S. ARPU rises to $27.62 in Q2 2026, up from $17.85 in Q2 2025, which shows faster revenue growth than the traditional per-user numbers. The monetization factor is the bull case moving forward, the reason management is combining user metrics, and the big caveat on the stock’s 22% drop.

Chart Shows Near-Term Bottom But Long Climb AheadReddit shares were already down on the year before the precipitous post-earnings drop, but had slowly been climbing out of their hole over the last few months. A death cross on the daily chart has scared bulls into hiding, and the latest earnings report coincided with a sharp price rejection at the 200-day moving average. The relative strength index (RSI) has bounced out of oversold territory following the stock’s 10% pop to open the week, but remains stuck in a bearish zone.

Analysts also noted the U.S. user growth slowdown, and the stock received several price target reductions following the Q2 report, including a $142 target from Wells Fargo, which is below the current price. But price target cuts from Oppenheimer, JPMorgan Chase, and Wedbush still have upside built under them, and the Q3 report will reveal whether monetization can keep outpacing engagement. For now, RDDT shares are likely stuck in another trading range, where the valuation has taken a hit, but upside catalysts are required to reignite the rally.

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Reddit is taking a cue from TikTok to bring viral stories to life through video. On Thursday’s second-quarter earnings call, the company said it’s been working on a new “video Reddit” experience that would not only allow users to watch videos from the platform, but also listen to posts in the background.

CEO Steve Huffman told investors that the company already sees people consuming this type of content on other platforms.

He’s right — on TikTok, for instance, there are 19.6 million posts labeled with the hashtag #reddit and another 9.9 million labeled #redditstories. Many of these feature a text-to-speech narration of a viral story published on Reddit paired with an unrelated video, like gameplay footage or cooking content.

“There is an emerging content type elsewhere on the internet of, basically, podcasts where people read Reddit content,” Huffman explained on the call. “I think this version of, like, listened-to or spoken Reddit can be really engaging, as well,” he said. “So that would be almost a different format entirely.”

It’s not clear how these types of Reddit videos will be incorporated into Reddit’s main app, but Huffman teased that the company will have something available for testing “later this year.”

The news comes as mainstream social and entertainment apps experiment with adding TikTok-like video feeds to their products.

Last week, Facebook announced plans to begin testing later this year a reimagined experience that will put a subset of users into a full-screen video as soon as they open the app. Streaming apps like  Netflix, Disney+, Peacock, and HBO Max have also added TikTok-like short video feeds in recent months. Amazon offers a short video feed for shopping inspiration. There’s even a short video feed on LinkedIn, of all places.

It’s the TikTok-ification of the web at scale.

In addition, the company touted the early success of video in comments, which launched in June. Reddit said the new feature already accounts for more than 10% of its video posts.

When you purchase through links in our articles, we may earn a small commission. This doesn’t affect our editorial independence.

Sarah has worked as a reporter for TechCrunch since August 2011. She joined the company after having previously spent over three years at ReadWriteWeb. Prior to her work as a reporter, Sarah worked in I.T. across a number of industries, including banking, retail and software.

You can contact or verify outreach from Sarah by emailing [email protected] or via encrypted message at sarahperez.01 on Signal.

Daily Active Uniques (“DAUq”) increased 18% year-over-year to 130.3 million

Weekly Active Uniques (“WAUq”) increased 24% year-over-year to 514.6 million, crossing half a billion

Revenue of $805 million grew 61% year-over-year. 8th consecutive quarter over 60%

Net income of $253 million, 31% of revenue, and Diluted EPS of $1.25, both up over 2x year-over-year

Adj. EBITDA1 of $343 million, 43% of revenue, up 106% year-over-year

Operating cash flow of $262 million, 33% of revenue, up 135% year-over-year

SAN FRANCISCO--(BUSINESS WIRE)--Reddit, Inc. (NYSE: RDDT) today announced financial results for the quarter ended June 30, 2026. Reddit’s complete financial results and management commentary can be found in its shareholder letter on Reddit’s Investor Relations website at https://investor.redditinc.com.

“In an increasingly automated web, the value of real human perspective has never been higher. Reddit’s commercial momentum reflects that,” said Steve Huffman, Founder and CEO of Reddit. “Crossing $1 million in revenue per employee and maintaining eight consecutive quarters of over 60% revenue growth shows the strength of our community model and the value we deliver to advertisers.”

Total revenue increased 61% year-over-year to $805 million, Ad revenue increased 64% year-over-year to $762 million, and Other revenue increased 24% year-over-year to $43 million Gross margin was 91.3%, as compared to 90.8% in the prior year, up 50 bps year-over-year Net income was $253 million, an improvement of $164 million from the prior year and more than doubling year-over-year Adjusted EBITDA1 was $343 million, an improvement of $176 million from the prior year and more than doubling year-over-year Operating cash flow was $262 million, an improvement of $151 million from the prior year and more than doubling year-over-year Free Cash Flow1 was $261 million, an improvement of $150 million from the prior year and more than doubling year-over-year Basic and diluted earnings per share (“EPS”) were $1.31 and $1.25, more than doubling year-over-year Total fully diluted shares outstanding were 207.0 million as of June 30, 2026, up 0.2% from the prior year We repurchased 1.5 million shares of our Class A common stock during the quarter for a total of $235 million at an average price per share of $157.57 Second Quarter 2026 Financial Highlights

Three months ended

June 30,

(in millions, except percentages and per share amounts; unaudited)

2026

2025

% Change

Revenue

$

805

$

500

61

%

U.S.

$

638

$

409

56

%

International

$

167

$

91

84

%

GAAP gross margin

91.3

%

90.8

%

Net income

$

253

$

89

183

%

Net margin

31.4

%

17.9

%

Net income per share

Basic

$

1.31

$

0.48

173

%

Diluted

$

1.25

$

0.45

178

%

Adjusted EBITDA*

$

343

$

167

106

%

Adjusted EBITDA margin*

42.6

%

33.4

%

Net cash provided by (used in) operating activities

$

262

$

111

135

%

Free Cash Flow*

$

261

$

111

135

%

Cash, cash equivalents, and marketable securities

$

2,786

*The definitions of Adjusted EBITDA, Adjusted EBITDA margin, and Free Cash Flow can be found in the Use of Non-GAAP Financial Measures section of this release. A reconciliation of non-GAAP financial measures to the most directly comparable U.S. GAAP measure can be found on pages 10-11.

Financial Outlook

The guidance provided below is based on Reddit’s current estimates and is not a guarantee of future performance. This guidance is subject to significant risks and uncertainties that could cause actual results to differ materially, including the risk factors discussed in Reddit’s reports on file with the Securities and Exchange Commission (the “SEC”). Reddit undertakes no duty to update any forward-looking statements or estimates, except as required by applicable law.

As we look ahead, we will share our internal thoughts on revenue and Adjusted EBITDA for the third quarter.

In the third quarter of 2026, we estimate:

Revenue in the range of $860 million to $870 million Adjusted EBITDA2 in the range of $385 million to $395 million Earnings Conference Call Information and Community Update

Reddit will host a conference call to discuss the results for the second quarter of 2026 on Thursday, July 30, 2026, at 1:30 p.m. PT / 4:30 p.m. ET. A live webcast of the call can be accessed on Reddit’s Investor Relations website at https://investor.redditinc.com and investor relations subreddit, r/RDDT, at https://www.reddit.com/r/RDDT/. A replay of the webcast and transcript will be available on the same websites following the conclusion of the conference call.

Reddit will solicit questions from the community in the investor relations subreddit, r/RDDT, at https://www.reddit.com/r/RDDT/ on Thursday, July 30, 2026, after the market closes, and post responses following the earnings call at Reddit’s Investor Relations website at https://investor.redditinc.com and r/RDDT at https://www.reddit.com/r/RDDT/.

Reddit uses the investor relations page on its website https://investor.redditinc.com, user accounts of Reddit's Chief Executive Officer, Steve Huffman (u/spez); Reddit's Chief Operating Officer, Jen Wong (u/adsjunkie); and Reddit's Chief Financial Officer, Drew Vollero (u/TimingandLuck), as well as the subreddits r/RDDT and r/reddit, available at https://www.reddit.com/r/RDDT/ and https://www.reddit.com/r/reddit/, respectively, as means of disclosing material non-public information and for complying with its disclosure obligation under Regulation FD.

Notes

1 The definitions of Adjusted EBITDA, Adjusted EBITDA margin, and Free Cash Flow can be found in the Use of Non-GAAP Financial Measures section of this release. A reconciliation of non-GAAP financial measures to the most directly comparable U.S. GAAP measure can be found on pages 10-11.
2 We have not provided a reconciliation to the forward-looking U.S. GAAP equivalent measures for our non-GAAP guidance due to uncertainty regarding, and the potential variability of, reconciling items. Therefore, a reconciliation of these non-GAAP guidance measures to their corresponding U.S. GAAP guidance measures is not available without unreasonable effort.

About Reddit

Reddit is a community of communities. Built on shared interests and passions, it is home to the most open and authentic conversations online. Every day, millions of people post, vote, comment, and search for answers across nearly every topic imaginable, and brands build trusted relationships with their audiences. With 26+ billion posts and comments and more than 130 million daily active uniques, Reddit is one of the internet’s largest sources of information. Learn more at www.redditinc.com. The Reddit app is available on the App Store and Google Play.

Forward Looking Statements

This press release contains forward-looking statements within the meaning of the Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995. Forward-looking statements generally relate to future events or Reddit's future financial or operating performance. In some cases, you can identify forward-looking statements because they contain words such as "may," "will," "should," "expects," "plans," "anticipates," "going to," "could," "intends," "target," "projects," "contemplates," "believes," "estimates," "predicts," "potential" or "continue" or the negative of these words or other similar terms or expressions that concern Reddit's expectations, strategy, priorities, plans or intentions. Forward-looking statements in this release include, but are not limited to, statements regarding Reddit’s future financial and operating performance, and GAAP and non-GAAP guidance. Reddit's expectations and beliefs regarding these matters may not materialize, and actual results in future periods are subject to risks and uncertainties that could cause actual results to differ materially from those projected, including those more fully described under the caption “Risk Factors” and elsewhere in documents that Reddit files with the SEC from time to time, including Reddit’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2026, which is being filed with the SEC at or around the date hereof. The forward-looking statements in this release are based on information available to Reddit as of the date hereof, and Reddit undertakes no obligation to update any forward-looking statements, except as required by law.

A Note About Metrics

We define a daily active unique (“DAUq”) as a user whom we can identify with a unique identifier who has visited a page on the Reddit website, www.reddit.com, or opened a Reddit application at least once during a 24-hour period. Average DAUq for a particular period is calculated by adding the number of DAUq on each day of that period and dividing that sum by the number of days in that period.

We define a weekly active unique (“WAUq”) as a user whom we can identify with a unique identifier who has visited a page on the Reddit website, www.reddit.com, or opened a Reddit application at least once during a trailing seven-day period. Average quarterly WAUq for a particular period is calculated by adding the number of WAUq on each day of that period and dividing that sum by the number of days in that period.

We define average revenue per unique (“ARPU”) as quarterly revenue in a given geography divided by the average DAUq in that geography. For the purposes of calculating ARPU, advertising revenue in a given geography is based on the geographic location in which advertising impressions are delivered, as this approximates revenue based on user activity, while other revenue in a given geography is based on the billing address of the customer.

Use of Non-GAAP Financial Measures

We use certain non-GAAP financial measures to supplement our consolidated financial statements, which are presented in accordance with U.S. GAAP, to evaluate our core operating performance. These non-GAAP financial measures include Adjusted EBITDA, Adjusted EBITDA margin, Free Cash Flow, and Free Cash Flow margin. We use these non-GAAP financial measures to facilitate reviews of our operational performance and as a basis for strategic planning. By excluding certain items that are non-recurring or not reflective of the performance of our normal course of business, we believe that these non-GAAP financial measures provide meaningful supplemental information regarding our performance. Accordingly, we believe these non-GAAP financial measures are useful to investors and others because they allow investors to supplement their understanding of our financial trends and evaluate our ongoing and future performance in the same manner as management. However, there are a number of limitations related to the use of non-GAAP financial measures as they reflect the exercise of judgment by our management about which expenses are included or excluded in determining these non-GAAP measures. These non-GAAP measures should be considered in addition to, not as a substitute for or in isolation from, our financial results prepared in accordance with U.S. GAAP. Other companies, including companies in our industry, may calculate these non-GAAP financial measures differently or not at all, which reduces their usefulness as comparative measures.

A reconciliation is provided below for each historical non-GAAP financial measure to the most directly comparable financial measure stated in accordance with U.S. GAAP. Reddit encourages investors to review the related U.S. GAAP financial measures and the reconciliation of these non-GAAP financial measures to their most directly comparable U.S. GAAP financial measures, and not to rely on any single financial measure to evaluate Reddit’s business. We have not provided a reconciliation to the forward-looking GAAP equivalent measures for our non-GAAP guidance due to uncertainty regarding, and the potential variability of, reconciling items. Therefore, a reconciliation of these non-GAAP guidance measures to their corresponding GAAP guidance measures is not available without unreasonable effort.

Adjusted EBITDA is defined as net income excluding interest (income) expense, net, income tax expense (benefit), depreciation and amortization, stock-based compensation expense and related taxes, other (income) expense, net, and certain other non-recurring or non-cash items impacting net income that we do not consider indicative of our ongoing business performance. Other (income) expense, net consists primarily of realized gains and losses on sales of marketable securities, foreign currency transaction gains and losses, and other income and expense that are not indicative of our core operating performance. Adjusted EBITDA margin is defined as Adjusted EBITDA divided by revenue. We consider the exclusion of certain non-recurring or non-cash items in calculating Adjusted EBITDA and Adjusted EBITDA margin to provide a useful measure for investors and others to evaluate our operating results in the same manner as management.

Free Cash Flow represents net cash provided by (used in) operating activities less purchases of property and equipment. Free Cash Flow margin is defined as Free Cash Flow divided by revenue. We believe that Free Cash Flow is useful to investors as a liquidity measure because it measures our ability to generate or use cash. Once our business needs and obligations are met, cash can be used to maintain a strong balance sheet and invest in future growth. Additionally, we believe that Free Cash Flow is an important measure since we use third-party infrastructure partners to host our services and therefore we do not incur significant capital expenditures to support revenue generating activities.

  Reddit, Inc.

Key Operating Metrics by Geography

(in millions, except percentages and ARPU)

(unaudited)

  Three months ended

June 30,

Six months ended

June 30,

2026

2025

% Change

2026

2025

% Change

Revenue: Global

$

804.9

$

499.6

61

%

$

1,468.3

$

892.0

65

%

Revenue: U.S.

$

638.1

$

408.8

56

%

$

1,163.7

$

722.7

61

%

Revenue: International

$

166.8

$

90.8

84

%

$

304.6

$

169.3

80

%

Three months ended

June 30,

2026

2025

% Change

DAUq: Global

130.3

110.4

18

%

DAUq: U.S.

53.2

50.3

6

%

DAUq: International

77.1

60.1

28

%

Logged-in DAUq: Global

52.6

49.3

7

%

Logged-in DAUq: U.S.

23.1

22.9

1

%

Logged-in DAUq: International

29.5

26.4

12

%

Logged-out DAUq: Global

77.7

61.1

27

%

Logged-out DAUq: U.S.

30.1

27.4

10

%

Logged-out DAUq: International

47.6

33.7

41

%

WAUq: Global

514.6

416.4

24

%

WAUq: U.S.

197.2

181.0

9

%

WAUq: International

317.4

235.4

35

%

ARPU: Global

$

6.18

$

4.53

36

%

ARPU: U.S.

$

11.85

$

7.87

51

%

ARPU: International

$

2.26

$

1.73

31

%

  Reddit, Inc. Consolidated Statements of Operations

(in thousands, except share and per share amounts)

(unaudited)

  Three months ended

June 30,

Six months ended

June 30,

2026

2025

2026

2025

Revenue

$

804,905

$

499,627

$

1,468,316

$

891,988

Costs and expenses:

Cost of revenue

70,308

45,900

126,575

82,989

Research and development

231,276

196,610

438,522

387,881

Sales and marketing

195,897

120,619

347,369

211,304

General and administrative

75,708

68,787

141,222

138,200

Total costs and expenses

573,189

431,916

1,053,688

820,374

Income from operations

231,716

67,711

414,628

71,614

Other income (expense), net

25,119

21,147

47,935

41,681

Income before income taxes

256,835

88,858

462,563

113,295

Income tax expense (benefit)

3,987

(439

)

5,734

(2,160

)

Net income

$

252,848

$

89,297

$

456,829

$

115,455

Net income per share attributable to Class A and Class B common stock

Basic

$

1.31

$

0.48

$

2.38

$

0.63

Diluted

$

1.25

$

0.45

$

2.26

$

0.58

Weighted-average shares used to compute net income per share attributable to common stockholders

Basic

192,345,684

185,437,777

191,932,329

183,730,992

Diluted

202,029,721

199,522,433

202,326,864

200,681,458

  Reddit, Inc. Consolidated Balance Sheets

(in thousands)

(unaudited)

  June 30,
2026

December 31,
2025

Assets

Current assets

Cash and cash equivalents

$

1,486,838

$

953,569

Marketable securities

1,299,519

1,523,242

Accounts receivable, net

650,098

590,162

Prepaid expenses and other current assets

105,210

69,012

Total current assets

3,541,665

3,135,985

Property and equipment, net

11,981

12,710

Operating lease right-of-use assets, net

18,411

20,788

Intangible assets, net

10,565

15,521

Goodwill

42,174

42,174

Other noncurrent assets

11,809

11,995

Total assets

$

3,636,605

$

3,239,173

Liabilities and stockholders’ equity

Current liabilities

Accounts payable

$

89,144

$

62,929

Operating lease liabilities

7,783

7,023

Accrued expenses and other current liabilities

240,822

201,331

Total current liabilities

337,749

271,283

Operating lease liabilities, noncurrent

13,084

16,191

Other noncurrent liabilities

72

22,661

Total liabilities

350,905

310,135

Commitments and contingencies

Stockholders’ equity:

Preferred stock

—

—

Class A common stock

14

14

Class B common stock

5

5

Class C common stock

—

—

Additional paid-in capital

3,504,664

3,595,772

Accumulated other comprehensive income (loss)

(4,695

)

4,364

Accumulated deficit

(214,288

)

(671,117

)

Total stockholders’ equity

3,285,700

2,929,038

Total liabilities and stockholders’ equity

$

3,636,605

$

3,239,173

  Reddit, Inc. Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

  Three months ended

June 30,

Six months ended

June 30,

2026

2025

2026

2025

Cash flows from operating activities

Net income

$

252,848

$

89,297

$

456,829

$

115,455

Adjustments to reconcile net income to net cash provided by (used in) operating activities:

Depreciation and amortization

4,258

3,934

8,468

7,897

Non-cash operating lease cost

1,743

1,514

3,419

2,982

Amortization of premium (accretion of discount) on marketable securities, net

(2,799

)

(6,691

)

(7,096

)

(15,575

)

Stock-based compensation expense

100,952

89,070

169,288

174,484

Other adjustments

85

97

(606

)

(41

)

Changes in operating assets and liabilities:

Accounts receivable

(127,228

)

(81,116

)

(59,271

)

(57,757

)

Prepaid expenses and other assets

(12,454

)

(9,352

)

(36,206

)

(26,358

)

Operating lease right-of-use assets and liabilities

(1,575

)

(1,589

)

(3,390

)

(3,369

)

Accounts payable

37,020

19,991

26,037

18,945

Accrued expenses and other liabilities

9,026

6,176

16,657

22,246

Net cash provided by (used in) operating activities

$

261,876

$

111,331

$

574,129

$

238,909

Cash flows from investing activities

Purchases of property and equipment

(1,134

)

(505

)

(2,224

)

(1,484

)

Purchases of marketable securities

(311,978

)

(556,457

)

(676,907

)

(1,061,303

)

Maturities of marketable securities

409,247

552,532

883,715

1,017,594

Proceeds from sale of marketable securities

—

—

17,989

12,372

Other investing activities

(1,421

)

2,354

(3,037

)

3,243

Net cash provided by (used in) investing activities

$

94,714

$

(2,076

)

$

219,536

$

(29,578

)

Cash flows from financing activities

Proceeds from exercise of employee stock options

5,037

4,303

9,936

14,487

Taxes paid related to net share settlement of restricted stock units

(14,546

)

(15,225

)

(30,742

)

(51,900

)

Repurchases of Class A common stock

(234,591

)

—

(239,590

)

—

Net cash provided by (used in) financing activities

$

(244,100

)

$

(10,922

)

$

(260,396

)

$

(37,413

)

Net increase (decrease) in cash and cash equivalents

112,490

98,333

533,269

171,918

Cash and cash equivalents at the beginning of the period

1,374,348

635,727

953,569

562,142

Cash and cash equivalents at the end of the period

$

1,486,838

$

734,060

$

1,486,838

$

734,060

  Reddit, Inc. Reconciliation of Adjusted EBITDA and Adjusted EBITDA Margin

(in thousands, except percentages)

(unaudited)

  Three months ended
June 30,

Six months ended
June 30,

2026

2025

2026

2025

Net income

$

252,848

$

89,297

$

456,829

$

115,455

Add (deduct):

Interest (income) expense, net

(25,027

)

(21,056

)

(48,912

)

(41,470

)

Income tax expense (benefit)

3,987

(439

)

5,734

(2,160

)

Depreciation and amortization

4,258

3,934

8,468

7,897

Stock-based compensation expense and related taxes

106,836

95,104

185,684

202,509

Other (income) expense, net

(92

)

(91

)

977

(211

)

Adjusted EBITDA

$

342,810

$

166,749

$

608,780

$

282,020

Net margin

31.4

%

17.9

%

31.1

%

12.9

%

Adjusted EBITDA margin

42.6

%

33.4

%

41.5

%

31.6

%

  Reddit, Inc.

Reconciliation of Free Cash Flow and Free Cash Flow Margin

(in thousands, except percentages)

(unaudited)

  Three months ended
June 30,

Six months ended
June 30,

2026

2025

2026

2025

Net cash provided by (used in) operating activities

$

261,876

$

111,331

$

574,129

$

238,909

Less:

Purchases of property and equipment

(1,134

)

(505

)

(2,224

)

(1,484

)

Free Cash Flow

$

260,742

$

110,826

$

571,905

$

237,425

Operating cash flow margin

32.5

%

22.3

%

39.1

%

26.8

%

Free Cash Flow margin

32.4

%

22.2

%

38.9

%

26.6

%

More News From Reddit, Inc.

Live Coverage Updates appear automatically as they are published.

Live Updates 7 minutes ago

Live

Reddit (NYSE:RDDT | RDDT Price Prediction) reports at 4:05 PM ET, with Polymarket pricing a 91.5% chance of a beat.

Top 5 Analyst Questions Progress toward the 100 million US DAU goal from Q1’s ~50 million Sustainability of 74% ad revenue growth while lapping tough Q2 2025 comps AI licensing economics and the reported Google data-access dispute Reddit Max adoption beyond the initial thousands of advertisers Pace of the $1 billion buyback after only $5 million repurchased in Q1 Key Topics Management Must Address H2 revenue outlook and advertiser commitment cycles Gross margin trend after 91.5% in Q1 International monetization runway Buzzwords to Listen For “One-of-one,” “authentic human conversation,” “age of AI,” “flywheel” Red Flags Shorter advertiser planning cycles Guidance below the Street Any softening in US ARPU growth from 54% 9 minutes ago

Live

Bull Case Reddit (NYSE:RDDT) has beaten revenue estimates every quarter shown, with Q1 2026 EPS of $1.01 vs. $0.5639 and ad revenue up 74% YoY. Adjusted EBITDA margin hit 40.1%; FCF surged +145.79% YoY. Polymarket traders assign a 91.5% beat probability; analyst consensus target sits at $227.30. International DAU growth of +26% plus AI licensing renewals with Google and OpenAI expand the monetization runway. Bear Case Q4 2025 EPS missed by -14.48%, sending shares down roughly 9%. Shares are down 22.57% YTD, and options imply a 12% post-earnings move. CEO Steve Huffman sold shares as recently as July 15, 2026, dampening insider sentiment. International ARPU of $2.02 lags US ARPU of $9.63, exposing a wide monetization gap. 1 hour ago

Live

Reddit reports Q2 2026 earnings at 4:05 PM ET after today’s close, with management guiding for revenue between $715 and $725 million. Prediction-market traders currently assign a 91.5% probability that the company beats earnings expectations.

The bigger questions involve the breadth of Reddit’s advertising funnel, US daily active user growth, and momentum from AI data-licensing agreements. Reddit trades at about 24x forward earnings while generating roughly 95% of its revenue from advertising.

A strong report with raised guidance could reinforce the company’s AI-era community moat, but a softer advertising outlook could reopen the growth-deceleration debate that pressured shares earlier this year.

Reddit (NYSE:RDDT) reports Q2 2026 earnings results tonight at about 4:05 PM ET. Shares trade at around $178.34, down 22.57% year to date but up 20.89% from this time last year.

Momentum Meets a Higher Bar Reddit crushed Q1 2026 with EPS of $1.01 against a $0.5639 consensus, a 79.11% beat. Revenue reached $663.41 million, growing 69.08% year over year on $625 million in advertising (+74% YoY).

Daily active uniques hit 126.8 million, up 17%, while adjusted EBITDA margin expanded to 40.1%. Free cash flow of $311.16 million jumped 145.79%, underscoring the capital-light model.

Act now: the analyst who called NVIDIA in 2010 just named his top 10 AI stocks — and Reddit didn't make the cut. Grab the names FREE today.

Consensus Estimates Metric Q2 2026 Estimate YoY Change FY 2026 Context Revenue (Company Guide) $715M to $725M ~+44% to +45% FY 2025 revenue: $2.20B EPS (Normalized) $0.99 n/a FY 2025 EPS: $2.62 Adj. EBITDA (Guide) $285M to $295M n/a Q1 26 margin: 40.1% The guidance implies a deceleration in revenue growth from Q1’s 69% pace, though EBITDA leverage continues to expand. With 21 buy ratings and a $227.30 consensus target, the bar sits above the reported number.

What I’ll Be Watching: Ad Funnel, DAU, and Data Licensing Tonight I’ll be watching whether Reddit’s ad revenue clears the top end of guidance, driven by strength across the top-15 verticals. Dynamic Product Ads posted a 91% ROAS lift in Q1, and Reddit Max campaigns delivered 17% lower CPA with 25%+ more conversions. Positive results here will validate the pricing story.

The US DAU trajectory will also be important to watch against the 100 million long-term target and international momentum, with machine translation in over 30 languages continuing to roll out across the UK and France.

Investors are eager to hear any updates on the Google data-access negotiations, which retail investors have flagged as a bullish catalyst. The company’s buyback pace matters too, as only $5 million of the $1 billion share repurchase authorization was deployed in Q1.

Earnings History Quarter EPS Surprise Day-Of Move 1-Week Move 30-Day Move Q1 2026 +79.11% +13.07% -6.42% +1.81% Q4 2025 -14.48% -7.43% -0.13% -1.94% Q3 2025 +53.79% +7.47% -6.88% +5.69% Q2 2025 +138.35% +17.47% +14.21% +18.29% On average, shares moved -0.79% one week after earnings over the past year.

Act now: the analyst who called NVIDIA in 2010 just named his top 10 AI stocks — and Reddit didn't make the cut. Grab the names FREE today.

Contact [email protected] for any questions or corrections.

Reddit (NYSE: RDDT) may be the most intriguing AI stock on the market.

Unlike semiconductors, software companies, or hyperscalers, Reddit derives its value in AI from its “corpus,” or the body of content on its site, which may be the most valuable source material for generative AI training and inference.

The vast majority of Reddit’s revenue still comes from advertising, but its potential in data licensing has helped expand the stock’s valuation and attracted AI investors.

The social media company is due to report second-quarter earnings after the market closes on Thursday. Could the stock soar on the news? Let’s take a closer look at what to expect.

Image source: The Motley Fool.

What to expect when Reddit reportsReddit has delivered phenomenal results since going public in 2024, and its shares are up more than 400% since then. However, the stock has been volatile over the last year, and is actually down 20% year-to-date as it fell sharply in January alongside the broader software sell-off, though it’s much different from a traditional software-as-a-service (SaaS) company.

Additionally, its revenue growth has not dipped below 48% since it went public, and ad revenue growth has been driven by new ad tools and automated ad campaigns, interest in the platform in the AI era, and the high commercial intent of users, as many subreddits focus on product or experience purchases.

After Reddit reported 69% growth in the first quarter, analysts are expecting another strong round of results in Q2, calling for 46.3% top-line growth to $731 million, and for generally accepted accounting principles (GAAP) earnings to more than double from $0.45 to $0.97.

The biggest catalyst to watchThe biggest issue facing Reddit right now is its standoff with Google over data licensing. The two companies have been renegotiating their $60 million-a-year deal as Reddit is wary of Google scraping its site and then using that information to direct users to Google’s AI Overviews, rather than to Reddit’s site. Reddit reportedly wants a usage-based fee from Google, unsatisfied with the current agreement.

Reddit stock fell 9% in a single session last week after The Wall Street Journal reported that the company had considered cutting off Google’s access to its content as part of its negotiations, suggesting investors are fearful of any fallout.

Expect plenty of questions on the earnings call about the relationship with Google, as Reddit could bring in significantly more cash if it secures usage-based fees or a similarly favorable deal from Google. Google’s shift to AI summaries has cannibalized traffic for media partners like Reddit, so the current system may be untenable.

Today's Change

(

6.37

%) $

10.76

Current Price

$

179.49

Digital advertising growth remains strong as Alphabet just reported 14% advertising growth in the second quarter. Reddit also has a history of lowballing guidance, meaning it could easily beat expectations in its second quarter. If it can do that, offer solid guidance, spin the Google news in a positive way, and signal more potential growth for the data licensing business, the stock could move significantly higher on Thursday.

Posted by Defense World Staff on Jul 22nd, 2026

Assetmark Inc. trimmed its holdings in shares of Reddit Inc. (NYSE:RDDT – Free Report) by 8.0% in the first quarter, according to its most recent disclosure with the Securities and Exchange Commission. The fund owned 40,971 shares of the company’s stock after selling 3,573 shares during the quarter. Assetmark Inc.’s holdings in Reddit were worth $5,517,000 at the end of the most recent quarter.

Other hedge funds have also bought and sold shares of the company. NewEdge Advisors LLC grew its stake in Reddit by 143.3% in the 1st quarter. NewEdge Advisors LLC now owns 7,982 shares of the company’s stock valued at $837,000 after purchasing an additional 4,701 shares during the period. Empowered Funds LLC purchased a new stake in shares of Reddit during the 1st quarter valued at $213,000. UBS AM A Distinct Business Unit of UBS Asset Management Americas LLC raised its stake in shares of Reddit by 106.3% during the 1st quarter. UBS AM A Distinct Business Unit of UBS Asset Management Americas LLC now owns 216,960 shares of the company’s stock worth $22,759,000 after purchasing an additional 111,780 shares during the period. Focus Partners Wealth raised its stake in shares of Reddit by 40.8% during the 1st quarter. Focus Partners Wealth now owns 10,224 shares of the company’s stock worth $1,073,000 after purchasing an additional 2,965 shares during the period. Finally, Geneos Wealth Management Inc. boosted its holdings in shares of Reddit by 344.6% in the 1st quarter. Geneos Wealth Management Inc. now owns 369 shares of the company’s stock worth $39,000 after buying an additional 286 shares during the last quarter.

Analysts Set New Price Targets RDDT has been the subject of several research reports. UBS Group restated a “mixed” rating on shares of Reddit in a research report on Thursday, July 9th. Bank of America dropped their target price on shares of Reddit from $205.00 to $175.00 and set a “neutral” rating on the stock in a research note on Thursday, April 2nd. Citizens Jmp reduced their target price on shares of Reddit from $250.00 to $240.00 and set a “market outperform” rating for the company in a research report on Friday, May 1st. The Goldman Sachs Group restated a “neutral” rating and set a $200.00 price target on shares of Reddit in a research note on Friday, May 1st. Finally, Truist Financial set a $265.00 price target on shares of Reddit in a report on Friday, May 1st. Nineteen analysts have rated the stock with a Buy rating and twelve have given a Hold rating to the company’s stock. Based on data from MarketBeat, Reddit presently has a consensus rating of “Moderate Buy” and a consensus price target of $232.48.

Get Our Latest Analysis on Reddit

Reddit Stock Up 2.4% Shares of NYSE RDDT opened at $185.93 on Wednesday. The company has a market cap of $35.79 billion, a P/E ratio of 53.12 and a beta of 1.93. Reddit Inc. has a 52 week low of $119.27 and a 52 week high of $282.95. The business has a 50-day simple moving average of $173.90 and a two-hundred day simple moving average of $168.62.

Reddit (NYSE:RDDT – Get Free Report) last released its quarterly earnings data on Thursday, April 30th. The company reported $1.01 EPS for the quarter, beating analysts’ consensus estimates of $0.62 by $0.39. The company had revenue of $663.41 million during the quarter, compared to analyst estimates of $607.74 million. Reddit had a net margin of 28.60% and a return on equity of 25.48%. Reddit’s revenue was up 69.1% compared to the same quarter last year. During the same period last year, the business earned $0.13 earnings per share. Equities research analysts anticipate that Reddit Inc. will post 4.85 EPS for the current year.

Insiders Place Their Bets In other news, CEO Steve Ladd Huffman sold 18,000 shares of the company’s stock in a transaction on Tuesday, June 30th. The shares were sold at an average price of $173.13, for a total value of $3,116,340.00. Following the transaction, the chief executive officer owned 373,814 shares of the company’s stock, valued at approximately $64,718,417.82. This represents a 4.59% decrease in their ownership of the stock. The transaction was disclosed in a document filed with the SEC, which can be accessed through the SEC website. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Also, CAO Michelle Marie Reynolds sold 808 shares of the stock in a transaction on Wednesday, July 1st. The stock was sold at an average price of $200.00, for a total value of $161,600.00. Following the completion of the sale, the chief accounting officer owned 15,060 shares in the company, valued at $3,012,000. This trade represents a 5.09% decrease in their position. Additional details regarding this sale are available in the official SEC disclosure. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Insiders have sold 169,141 shares of company stock worth $28,680,845 in the last three months. 28.48% of the stock is currently owned by corporate insiders.

Reddit Company Profile (Free Report)

Reddit is an online social news aggregation, discussion and content-sharing platform organized around user-created communities called “subreddits,” each focused on a particular topic or interest. Registered users submit links, text posts, images and video, and community members vote and comment to surface popular content. The site is accessed via its web platform and mobile apps for iOS and Android, and it supports live events such as Ask Me Anything (AMA) sessions and community-driven discussions.

Founded in 2005 by Steve Huffman and Alexis Ohanian, Reddit is headquartered in San Francisco and serves a global audience with particularly large user bases in the United States and other English-speaking markets.

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Key Takeaways Reddit is expanding AI through Google and OpenAI partnerships, boosting licensing revenues and relevance. RDDT improved ads, search and feeds with AI, as Q1 2026 search weekly active users rose 30% year over year. Reddit expects Q2 2026 revenues of $715-$725M as AI investments support top-line growth. Reddit (RDDT - Free Report) is benefiting from accelerating momentum in its AI initiative, which is increasingly positioning it as a foundational resource in the modern Internet landscape. With more than 25 billion posts and comments and nearly 500 million weekly users, Reddit’s platform is uniquely positioned to provide real human perspectives, an essential resource for both AI model training and genuine user engagement.

A key driver of this momentum is Reddit’s strategic partnerships with leading AI companies such as Google and OpenAI. These collaborations generate direct licensing revenues and reinforce Reddit’s relevance as a source of high-quality, diverse data for large language models. The company highlighted that it remains the most-cited source in AI citations across platforms, and that its data is among the most-searched on Google.

Reddit is leveraging AI and machine learning to enhance its own platform. The company has invested heavily in machine learning talent and infrastructure, focusing on improving the user experience through better content recommendations, faster onboarding and more relevant feeds. Reddit’s ad stack now integrates AI-driven automation and optimization, resulting in measurable improvements for advertisers, such as a 17% reduction in cost per action and a 25% increase in conversions for those using AI-powered campaign features.

Reddit’s AI-driven product improvements are enhancing user experience and engagement. The company has focused on upgrading its talent and infrastructure, particularly in machine learning, to improve core features such as feed relevance, onboarding and search. In the first quarter of 2026, search weekly active users were up 30% year over year, and new AI-powered features like bot verification and machine translation are making the platform more accessible and secure.

Reddit’s AI strategy is expected to benefit the company by driving its top-line growth. For the second quarter of 2026, management expects revenues to be in the range of $715 million to $725 million.

RDDT Faces Stiff CompetitionRDDT is facing stiff competition from competitors like Meta Platforms (META - Free Report) and Snap (SNAP - Free Report) . Both Meta Platforms and Snap are also expanding their footprint in the AI space.

Meta Platform is benefiting from its accelerating growth into artificial intelligence (AI), which is driving significant top-line growth. Meta Platform’s release of the Muse family of models and the upgraded Meta AI assistant has positioned the company as a leader in personal superintelligence, with billions of users now accessing these AI-powered features. This surge in AI-driven engagement is translating directly into top-line growth, as evidenced by a 33% year-over-year increase in total revenues to $56.3 billion for the first quarter of 2026.

Snap has introduced a suite of AI-powered advertising tools to help brands create, optimize and personalize campaigns on Snapchat. New features include AI-assisted campaign setup, image-to-video generation, creative enhancement, conversational AI Sponsored Snaps and creator marketplace automation, aimed at improving engagement, commerce and advertising performance across its platform.

RDDT’s Share Price Performance, Valuation and EstimatesRDDT shares have plunged 19.4% year to date, underperforming the broader Zacks Computer & Technology sector’s 16.5% appreciation and the Internet - Software industry’s 3.8% decline.

RDDT Stock Performance
Image Source: Zacks Investment Research

RDDT shares are overvalued, with a forward 12-month Price/Sales of 9.32X compared with the Computer & Technology sector’s 6.88X. RDDT has a Value Score of F.

RDDT Valuation
Image Source: Zacks Investment Research

The Zacks Consensus Estimate for 2026 earnings is pegged at $4.83 per share, which has been unchanged over the past 30 days. This suggests 84.35% year-over-year growth.

RDDT currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Reddit Inc (NYSE:RDDT) is expected to beat Wall Street's second-quarter revenue and EBITDA targets, according to Jefferies, which pointed to strong ad checks and improving user growth heading into the print.

The brokerage said investor conversations point to expectations for revenue and EBITDA to come in mid-single-digit and low-double-digit percent above consensus, respectively.

Jefferies also expects third-quarter guidance to beat consensus by a similar margin to last quarter, when the company's outlook topped the street by low-single-digit percent on revenue and mid-single-digit percent on EBITDA.

User growth remains the central debate for investors. Jefferies believes the market is looking for a sequential increase in quarter-over-quarter net adds in US logged-in daily active users, following growth of 200,000 in the first quarter. Its traffic analysis shows US web and app DAUs rebounded from declines in February and March to growth throughout the second quarter, while total web DAU growth improved to 16% year-over-year from 15% in the first quarter.

With Reddit set to drop its logged-in DAU disclosure starting in the third quarter, Jefferies said a strong second-quarter showing on that metric matters more for shifting investor focus back to monetization.

Jefferies said it will watch for progress on adoption of Reddit's newer low-funnel ad products and automation tools, which its Max offering is expected to help support, along with updated commentary on data licensing strategy ahead of potential 2027 renewal talks with Google and OpenAI.

Other focus areas for the earnings call include DAU growth drivers such as onboarding and personalization improvements, advertiser count growth and diversification into smaller advertisers, ARPU sustainability, and new product launches.

Reddit Inc (NYSE:RDDT) continued to gain share of social advertising budgets in the second quarter, with agency checks pointing to strong momentum ahead, according to a note from Jefferies.

Agencies reported that digital ad spending accelerated sequentially in the second quarter, with growth expected to hold steady through the second half of the year.

“Agencies cited Reddit’s contextual targeting capabilities as critical for driving more low-funnel spend, suggesting new performance products could extend the runway for share gains,” Jefferies analysts wrote.

“Talks also continued to highlight limited risk to social budgets from LLM advertising,” Jefferies added, leading analysts to conclude Reddit’s second quarter is “likely to exhibit strong momentum.”

Macro-sensitive advertisers turned more constructive after showing hesitancy earlier in the year tied to Middle East conflict concerns.

Paid social continued to gain share within the broader digital ad market, supported by improving lower-funnel capabilities, growing investment in influencer strategies, and an expanding role in product discovery.

Reddit's gains were attributed to its high-intent audience, incremental reach, and contextual targeting capabilities. Agencies most frequently cited LinkedIn, Pinterest, Snap, and X as the platforms losing budget share to Reddit.

Advertiser adoption of Reddit's offerings remains concentrated in the mid and upper funnel, while newer performance products, including dynamic product ads, are still in early stages. Agencies said most advertisers remain in a test-and-learn phase with these tools, and further improvements to lower-funnel measurement and targeting could unlock additional budget by bringing Reddit closer to parity with competitors.

Reddit's investments in automation and ease-of-use, including its "Max" tool and Shopify integration, are also lowering barriers to entry for smaller advertisers, according to the note. Jefferies said this could broaden Reddit's advertiser base and support continued growth if spending among longer-standing advertisers moderates.

By contrast, agencies trialing ChatGPT's advertising product described the results as underwhelming, citing above-average cost per impression, uncertain return on ad spend, and budgets that were either incremental or diverted from search rather than social.

Key Takeaways Reddit's DAUq grew 17%, WAUq 23% and ARPU 44% year over year in the first quarter of 2026. RDDT is expanding globally with machine translation, lifting international revenues and user growth. RDDT trades at a premium, but revenue and earnings estimates point to strong year-over-year growth. Reddit (RDDT - Free Report) shares have lost 28.2% in the past six months, in contrast to the broader Zacks Computer & Technology sector’s rise of 15.2%.

The company’s shares have also underperformed its peers like Pinterest (PINS - Free Report) , META Platforms (META - Free Report) , and Alphabet (GOOGL - Free Report) , which are expanding their footprint into advertising to compete in the rapidly growing digital ad market. While Pinterest and Meta Platforms’ shares have lost 20.8% and 13.4%, respectively, Alphabet shares have risen 13.4% in the past six-month period.

Reddit’s underperformance can be attributed to a challenging macroeconomic environment and seasonal volatility. Stiff competition in the digital advertising market poses a significant challenge for Reddit.

RDDT Stock Performance
Image Source: Zacks Investment Research

However, the company’s expanding portfolio, strong user engagement, including rising daily and weekly active users, gains in Average Revenue Per User (ARPU), and the expansion of advertiser tools such as Dynamic Product Ads (DPAs), Reddit Pixel, and CAPI have been key catalysts. These factors are expected to fend off competitors like Pinterest, Meta Platforms, and Alphabet.

RDDT Benefits From Expanding PortfolioReddit’s expanding portfolio has been a key catalyst in driving the company’s user engagement. In the first quarter of 2026, ARPU increased 44% year over year to $5.23, indicating that portfolio expansions are driving higher monetization per user. Reddit reported 126.8 million daily active uniques (DAUq), up 17% year over year, and 493.1 million weekly active uniques (WAUq), up 23% year over year.

Further expanding its portfolio, in June 2026, Reddit launched video in comments, allowing users to reply with short videos alongside text, images and GIFs for more expressive conversations. Users can upload an existing clip or record one directly within the comment box.

The feature is being rolled out across eligible public, safe-for-work communities, while moderators retain control over whether video comments are enabled and who can post them. The new addition makes discussions more immersive by letting users demonstrate ideas visually, further expanding engagement options and encouraging richer community interactions.

RDDT Rides on Strong International ExpansionReddit is benefiting from a robust international expansion strategy that is fueling both its financial performance and long-term growth prospects. In the first quarter of 2026, international revenues surged 76% year over year, outpacing the already strong 67% growth in U.S. revenues.

In the first quarter of 2026, International ARPU increased 51% year over year to $2.02, signaling improving monetization intensity across regions. The platform’s international daily active unique users grew 26% year over year to 73.3 million. These metrics highlight Reddit’s ability to attract and engage users outside the United States, which is critical for its advertising revenues.

One of the key drivers behind this international momentum is Reddit’s investment in machine translation, which has enabled the platform to support content in more than 30 languages, helping to build local communities and increase engagement outside the United States. The company is also investing in features like bot verification, improved onboarding, and faster app performance to enhance user experience.  The adoption of advanced ad products like Reddit Max and Dynamic Product Ads is helping advertisers achieve strong returns, further encouraging global brands to invest in Reddit’s platform.

Earnings Estimates for Reddit Show Upward TrendRDDT’s expanding portfolio and rising user engagement are expected to drive the company’s top-line growth.

For the second quarter of 2026, management expects revenues to be in the range of $715 million to $725 million. The Zacks Consensus Estimate for second-quarter revenues is pegged at $746.89 million, indicating year-over-year growth of 49.49%.

For the second quarter, the consensus mark for earnings is pegged at 99 cents per share, unchanged over the past 30 days. This implies year-over-year growth of 120%.

RDDT Stock Is OvervaluedReddit stock is currently trading at a premium, as suggested by its Value Score of F.

In terms of the forward 12-month price/sales ratio, RDDT is trading at 8.84X, higher than the broader Zacks Computer & Technology sector’s 6.49X.

RDDT Valuation
Image Source: Zacks Investment Research

ConclusionReddit’s prospects benefit from an expanding advertising business, an expanding clientele, and rising user engagement. These factors justify the company’s premium valuation.

RDDT stock currently carries a Zacks Rank #2 (Buy) and has a Growth Score of A, a favorable combination that offers a strong investment opportunity, per the Zacks proprietary methodology. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.