Reddit Inc Class A (RDDT) AI Stock Analysis

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Reddit Inc Class A

(NYSE:RDDT)

Select Model

Outperform 73 (OpenAI - 4o)

Rating:73Outperform

Price Target:

$270.00

▲(12.45% Upside)

Reddit Inc's overall stock score is driven by strong financial performance and positive earnings call sentiment, indicating robust growth and strategic initiatives. However, technical indicators suggest overbought conditions, and the high P/E ratio raises valuation concerns. The company's ability to maintain growth while managing costs and external dependencies will be crucial.

Positive Factors

Revenue Growth

The significant revenue growth indicates strong market demand and effective monetization strategies, reinforcing Reddit's competitive position in the social media industry.

Cash Flow Improvement

Improved cash flow demonstrates Reddit's enhanced ability to generate cash, providing financial flexibility for future investments and strategic initiatives.

International Expansion

International expansion through language support opens new markets, potentially increasing user base and revenue streams, solidifying Reddit's global presence.

Negative Factors

Rising Costs

Increasing costs could pressure margins and profitability, challenging Reddit's ability to sustain its growth trajectory without impacting financial health.

Dependency on Google Traffic

Reliance on Google for traffic poses a risk to user acquisition and growth, as changes in Google's algorithms or policies could adversely affect Reddit's visibility.

Leadership Stock Sale

The sale of shares by a top executive might signal concerns about future company performance, potentially affecting investor confidence and stock stability.

Reddit Inc Class A (RDDT) vs. SPDR S&P 500 ETF (SPY)

Market Cap

$44.11B

Dividend YieldN/A

Average Volume (3M)6.26M

Price to Earnings (P/E)196.5

Beta (1Y)2.29

Revenue Growth69.97%

EPS GrowthN/A

CountryUS

Employees2,233

SectorGeneral

Sector StrengthN/A

IndustryInternet Content & Information

Share Statistics

EPS (TTM)0.45

Shares Outstanding134,585,850

10 Day Avg. Volume6,226,988

30 Day Avg. Volume6,262,599

Financial Highlights & Ratios

PEG Ratio-0.16

Price to Book (P/B)13.83

Price to Sales (P/S)22.67

P/FCF Ratio136.55

Enterprise Value/Market Cap0.59

Enterprise Value/Revenue15.67

Enterprise Value/Gross Profit17.21

Enterprise Value/Ebitda177.33

Forecast

1Y Price Target

$235.23

Price Target Upside-2.03% Downside

Rating ConsensusModerate Buy

Number of Analyst Covering26

Reddit Inc Class A Business Overview & Revenue Model

Company DescriptionReddit Inc Class A (RDDT) is a social media and online community platform that allows users to share content, engage in discussions, and participate in niche communities known as subreddits. Founded in 2005, Reddit operates as a hub for user-generated content across a wide range of topics, including news, entertainment, and hobbies. The platform is primarily driven by user interaction and community engagement, providing a unique space for free expression and diverse viewpoints.

How the Company Makes MoneyReddit generates revenue primarily through advertising, subscription services, and premium memberships. The advertising model includes display ads, sponsored posts, and promoted content, allowing brands to target specific audiences within the platform's diverse user base. Additionally, Reddit offers a premium membership service called Reddit Premium, which provides users with an ad-free experience and various exclusive features. Partnerships with brands for sponsored content also contribute to its earnings, as companies seek to leverage Reddit's engaged community for marketing purposes. The company continuously explores new monetization strategies, such as expanding its advertising capabilities and enhancing user engagement to drive revenue growth.

Reddit Inc Class A Key Performance Indicators (KPIs)

Any

Total Daily Active Users

Total Daily Active Users
Shows the total number of users engaging with the platform daily, indicating user retention and platform popularity.

Chart InsightsReddit's daily active users have surged significantly, with a 31% year-over-year increase, reaching 108 million by Q1 2025. This growth aligns with the company's strategic focus on expanding its user base and enhancing advertising capabilities. The earnings call highlighted robust revenue growth driven by advertising, despite challenges like search traffic volatility and moderation issues. Reddit's international expansion and innovative product developments, such as AI-driven features, are key drivers of this user growth, positioning the platform for sustained momentum despite potential short-term disruptions.

Data provided by:

Main Street Data

Reddit Inc Class A Earnings Call Summary

Earnings Call Date:Jul 31, 2025

(Q2-2025)

% Change Since: |

Next Earnings Date:Nov 04, 2025

Earnings Call Sentiment Positive

The earnings call highlighted significant achievements in revenue growth, user base expansion, and advertising success. However, challenges such as dependency on Google traffic and rising costs present concerns. Despite these challenges, the company's strategic focus on product improvement and international expansion suggests a positive outlook.

Q2-2025 Updates

Positive Updates

Record Revenue Growth

Revenue grew 78% year-over-year to $500 million, marking the fastest quarterly growth rate since 2022.

Increase in Daily Active Users

Daily active users grew to 110 million, up 21% year-over-year, driven by product improvements and increased marketing activity.

Advertising Business Surge

Advertising revenue grew 84% year-over-year to $465 million, with total active advertiser count expanding by over 50%.

Profitability Milestones

Adjusted EBITDA reached $167 million, with a net income of $89 million. The adjusted EBITDA margin was 33%, up over 1,900 basis points year-over-year.

International Expansion

Machine translation is now live in 23 languages, unlocking Reddit for millions of people across Asia, Europe, and Latin America.

Negative Updates

Challenges with Google Traffic

Traffic from Google was a headwind in Q2, affecting user acquisition despite the overall growth.

Higher Variable Costs

Total adjusted costs were $333 million, up 38% year-over-year, driven by higher variable cost expenses from accelerating revenues.

Deprioritization of User Economy Initiatives

Reddit is deprioritizing initiatives related to the user economy to focus on core product improvements and international expansion.

Company Guidance

During Reddit's Second Quarter 2025 Earnings Call, the company provided an optimistic outlook for the future, underlined by a significant year-over-year revenue growth of 78%, reaching $500 million. The daily active user base expanded by 21% to 110 million, driven by product enhancements and increased marketing efforts. The advertising segment experienced an 84% growth, totaling $465 million, with the active advertiser count jumping by over 50%. Reddit's financial performance was further bolstered by achieving its most profitable quarter yet, with an adjusted EBITDA of $167 million and a net income of $89 million. The call highlighted strategic priorities, including international expansion, which saw machine translation go live in 23 languages, and the integration of AI into their search feature, with Reddit Answers growing to 6 million users. The company emphasized leveraging AI while maintaining the authenticity of human-driven conversations, positioning itself as a critical data source for AI training and search engines. Reddit's long-term vision is to become a central platform for human connection, uniquely differentiating itself in an increasingly automated digital landscape.

Reddit Inc Class A Financial Statement Overview

Summary

Reddit Inc has demonstrated significant financial improvement with strong revenue growth, a robust gross profit margin, and positive net profit margins. The balance sheet is strong with minimal leverage and high equity, while cash flow has improved significantly, indicating strong cash generation and financial flexibility.

Income Statement

Very Positive

Reddit Inc has shown strong revenue growth with a remarkable increase from $804 million in 2023 to $1.67 billion TTM. The gross profit margin is robust at 91.26% TTM. Net profit margin has turned positive at 12.97% TTM, a significant improvement from negative margins in previous years. EBIT and EBITDA margins are also positive, indicating improved operational efficiency.

Balance Sheet

Very Positive

The company's balance sheet is strong with a low debt-to-equity ratio of 0.01 TTM, indicating minimal leverage. Return on Equity (ROE) has turned positive to 9.06% TTM, reflecting profitability. The equity ratio is high at 90.67% TTM, demonstrating a strong capital base and low financial risk.

Cash Flow

Very Positive

Operating cash flow has improved significantly from negative figures in 2022 to $400 million TTM, indicating strong cash generation. Free cash flow growth is robust, and the operating cash flow to net income ratio is 1.85 TTM, showing effective cash management. The company has transitioned to generating positive free cash flow, enhancing financial flexibility.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	1.67B	1.30B	804.03M	666.70M	484.92M	228.91M
Gross Profit	1.52B	1.18B	693.02M	561.90M	412.35M	173.88M
EBITDA	147.37M	-544.92M	-126.46M	-164.16M	-124.40M	-57.14M
Net Income	216.34M	-484.28M	-90.82M	-158.55M	-127.90M	-59.17M
Balance Sheet
Total Assets	2.63B	2.34B	1.60B	1.60B	1.65B	524.14M
Cash, Cash Equivalents and Short-Term Investments	2.06B	1.84B	1.21B	1.27B	1.41B	362.64M
Total Debt	25.18M	26.70M	25.75M	19.49M	13.46M	19.93M
Total Liabilities	245.22M	205.85M	155.90M	125.28M	77.63M	65.01M
Stockholders Equity	2.39B	2.13B	1.44B	1.47B	1.57B	459.13M
Cash Flow
Free Cash Flow	396.85M	215.82M	-84.84M	-100.25M	-132.49M	-64.89M
Operating Cash Flow	400.53M	222.07M	-75.11M	-94.02M	-130.19M	-61.84M
Investing Cash Flow	-64.73M	-440.69M	41.29M	-804.18M	170.68M	81.18M
Financing Cash Flow	-69.74M	379.54M	-811.00K	-3.78M	1.18B	8.33M

Reddit Inc Class A Technical Analysis

Technical Analysis Sentiment

Positive

Last Price240.11

Price Trends

50DMA

216.19

Positive

100DMA

170.91

Positive

200DMA

161.14

Positive

Market Momentum

MACD

7.56

Positive

RSI

51.31

Neutral

STOCH

15.05

Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For RDDT, the sentiment is Positive. The current price of 240.11 is below the 20-day moving average (MA) of 246.00, above the 50-day MA of 216.19, and above the 200-day MA of 161.14, indicating a neutral trend. The MACD of 7.56 indicates Positive momentum. The RSI at 51.31 is Neutral, neither overbought nor oversold. The STOCH value of 15.05 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for RDDT.

Reddit Inc Class A Risk Analysis

Reddit Inc Class A disclosed 49 risk factors in its most recent earnings report. Reddit Inc Class A reported the most risks in the "Finance & Corporate" category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

Reddit Inc Class A Peers Comparison

Overall Rating

UnderperformOutperform

Sector (55)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
PINS	78 Outperform	22.85B	12.01	40.02%	―	17.00%	901.05%
YELP	73 Outperform	1.99B	14.24	19.98%	―	5.37%	13.08%
RDDT	73 Outperform	$44.11B	196.46	10.11%	―	69.97%	―
MTCH	68 Neutral	8.72B	17.67	-232.94%	1.05%	-0.60%	-11.05%
SNAP	63 Neutral	13.97B	-25.38	-28.48%	―	13.18%	54.39%
NXDR	54 Neutral	824.86M	-12.65	-14.98%	―	9.65%	56.50%
Sector *	55 Neutral	$6.65B	3.83	-15.92%	6.20%	10.91%	7.18%

* General Sector Average

Performance Comparison

RDDT

Reddit Inc Class A

240.11

173.03

257.95%

YELP

Yelp

31.48

-3.43

-9.83%

SNAP

Snap

8.27

-2.60

-23.92%

PINS

33.60

1.12

3.45%

MTCH

Match Group

36.24

-0.90

-2.42%

NXDR

Nextdoor Holdings

2.13

-0.38

-15.14%

Reddit Inc Class A Corporate Events

Private Placements and FinancingBusiness Operations and Strategy

Reddit Inc Amends Credit Agreement with JPMorgan

Neutral

Jul 2, 2025

On July 1, 2025, Reddit, Inc. amended and restated its Credit and Guarantee Agreement with JPMorgan Chase Bank, N.A., extending the maturity date of its revolving credit facility to July 1, 2030, and decreasing total commitments to $500 million. The agreement includes covenants that restrict certain financial activities and allows for the removal of guarantees and collateral upon achieving certain investment grade ratings, impacting Reddit’s financial flexibility and operational strategy.

Executive/Board ChangesShareholder Meetings

Reddit Inc Holds Annual Stockholders Meeting

Neutral

Jun 10, 2025

On June 9, 2025, Reddit, Inc. held its annual meeting of stockholders, where four proposals were voted on. The stockholders elected eight directors to serve until the 2026 annual meeting, ratified KPMG LLP as the independent accounting firm for 2025, approved executive compensation, and decided to hold annual advisory votes on executive compensation. These decisions reflect the company’s commitment to governance and transparency, potentially impacting its strategic direction and stakeholder engagement.

Glossary

BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.Date of analysis: Aug 19, 2025