Shares in Reddit (RDDT) jumped over 15% in Friday’s pre-market after the social media company reported first-quarter 2026 earnings results that significantly surpassed Wall Street expectations. The company also gave a revenue forecast for the second quarter that matched expectations, even as founder and CEO Steve Huffman trumpeted how AI is giving a boost to the business.
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Reddit Posts Solid Q1 Results
During the January-to-March quarter, Reddit saw its revenue blast up by 69% from a year ago to reach $663 million, far ahead of the Wall Street consensus of $609.78 million. Its diluted earnings per share ballooned by 677% year-over-year to $1.01, greatly exceeding analysts’ estimates of 56 cents per share.
In addition, the social news aggregator’s profit exploded nearly eightfold, or by 680% year-over-year, to $204 million. The revenue growth was fueled by a massive 74% rise in ad revenue, which hit $625 million at the end of the quarter.
Furthermore, Reddit expanded its daily active uniques — that is users who used its platform at least once in a day — by 17% from the prior-year period to 126.8 million. This came amid fears the rise of AI will lead to disintermediation, that is, AI becoming the middleman between users and traditional internet platforms, cutting the latter’s revenue generation capacity.
‘We Are the Fuel for AI’
However, Huffman touted Reddit’s offerings of “deeply engaged communities and authentic human conversation.”
“That foundation is driving a rare combination of growth, profitability, and efficiency and giving Reddit a unique advantage in the age of AI,” Huffman said in the earnings report.
He further told CNBC in an interview that “We are the fuel for AI,” noting that Reddit has emerged as one of the key trusted sources for product purchasing information.
Looking ahead, Reddit expects its Q2 2026 revenue to come in between $715 million and $725 million. The low-end roughly matches the Wall Street consensus of $715.53 million, while the high-end beats the midpoint of $720 million.
Is Reddit Stock Worth Buying?
On Wall Street, Reddit’s shares carry a Moderate Buy consensus rating from analysts. This is based on 13 Buys, nine Holds, and one Sell assigned over the past three months.
However, the average RDDT price target of $221.13 implies about 50% upside in the months ahead. Nonetheless, it is important to note that analysts’ ratings may change following the latest earnings report.
