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Reddit Inc Class A (RDDT)
NYSE:RDDT
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Reddit Inc Class A
(NYSE:RDDT)
Rating:73Outperform
Price Target:
$270.00
▲(22.69% Upside)
Positive Factors
Revenue Growth
Reddit reported very strong revenue growth momentum with both Q2 results and Q3 guidance solidly above expectations.
User Growth
User growth trends ended Q2 better than initial expectations, with management focusing on growing logged-in users despite Google Search volatility.
Negative Factors
Traffic Volatility
Concerns exist about Reddit's exposure to user volatility from Google traffic and changes in user behavior.
Valuation Concerns
Analyst maintains a neutral rating due to premium valuation and potential traffic volatility related to Google AI changes.
Reddit Inc Class A (RDDT) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$42.13B
Dividend YieldN/A
Average Volume (3M)7.66M
Price to Earnings (P/E)190.0
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. Volume6,417,805
30 Day Avg. Volume7,658,454
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)N/A
P/FCF RatioN/A
Enterprise Value/Market Cap0.62
Enterprise Value/Revenue15.67
Enterprise Value/Gross Profit17.21
Enterprise Value/Ebitda177.33
Forecast
1Y Price Target
$208.13Price Target Upside-5.42% Downside
Rating ConsensusModerate Buy
Number of Analyst Covering23
Reddit Inc Class A Business Overview & Revenue Model
Company DescriptionReddit Inc. is an American social media company that operates a network of online communities where users can engage in discussions, share content, and connect with others based on interests. Founded in 2005 and headquartered in San Francisco, Reddit is known for its diverse user-generated content covering a wide array of topics. The platform is organized into 'subreddits,' each focusing on specific themes or subjects, and is popular for its community-driven approach to content curation and discussion.
How the Company Makes MoneyReddit primarily generates revenue through advertising, leveraging its vast user base and niche communities to offer targeted ad placements. The company provides various advertising solutions, including display ads, promoted posts, and video ads, aimed at engaging users based on their interests and behaviors. Additionally, Reddit offers a premium subscription service, Reddit Premium, which provides users with an ad-free experience and access to exclusive features. Partnerships with brands and content creators also play a role in driving revenue through sponsored content and collaborations that enhance user engagement and brand visibility on the platform.
Reddit Inc Class A Key Performance Indicators (KPIs)
Any
Total Daily Active Users
Shows the total number of users engaging with the platform daily, indicating user retention and platform popularity.
Shows the total number of users engaging with the platform daily, indicating user retention and platform popularity.
Data provided by:
Main Street Data
Main Street DataReddit 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
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.85
Very Positive
Balance Sheet
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.90
Very Positive
Cash Flow
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.88
Very Positive
| 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
Neutral
220.06
Price Trends
179.38
Positive
145.59
Positive
151.49
Positive
Market Momentum
12.45
Positive
59.18
Neutral
53.38
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For RDDT, the sentiment is Neutral. The current price of 220.06 is below the 20-day moving average (MA) of 222.69, above the 50-day MA of 179.38, and above the 200-day MA of 151.49, indicating a neutral trend. The MACD of 12.45 indicates Positive momentum. The RSI at 59.18 is Neutral, neither overbought nor oversold. The STOCH value of 53.38 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral 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 |
|---|---|---|---|---|---|---|---|
79 Outperform | $24.91B | 13.09 | 48.08% | ― | 17.00% | 901.05% | |
73 Outperform | $42.13B | 189.99 | 10.11% | ― | 69.97% | ― | |
70 Outperform | $1.99B | 14.31 | 20.13% | ― | 5.37% | 13.08% | |
68 Neutral | $8.98B | 18.39 | -865.98% | 1.03% | -0.60% | -11.05% | |
59 Neutral | $12.07B | ― | -26.42% | ― | 13.18% | 54.39% | |
55 Neutral | $6.43B | -2.95 | -17.15% | 6.02% | 15.14% | 1.34% | |
54 Neutral | $793.88M | ― | -14.27% | ― | 9.65% | 56.50% |
* General Sector Average
Performance Comparison
RDDT
Reddit Inc Class A
220.06
163.06
286.07%
YELP
Yelp
31.39
-2.70
-7.92%
SNAP
Snap
7.33
-1.46
-16.61%
PINS
Pinterest
36.73
5.90
19.14%
MTCH
Match Group
36.98
1.17
3.27%
NXDR
Nextdoor Holdings
2.01
-0.34
-14.47%
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.