Reddit Inc Class A (RDDT) AI Stock Analysis

• Market Cap: $34.80B
• Dividend Yield: N/A
• Average Volume (3M): 6.09M
• Price to Earnings (P/E): 107.2
• Beta (1Y): 2.29
• Revenue Growth: 69.71%
• EPS Growth: N/A
• Country: US
• Employees: 2,233
• Sector: Communication Services
• Sector Strength: 97
• Industry: Internet Content & Information
• EPS (TTM): 0.80
• Shares Outstanding: 137,824,830
• 10 Day Avg. Volume: 7,658,545
• 30 Day Avg. Volume: 6,094,076
• PEG Ratio: -0.16
• Price to Book (P/B): 13.83
• Price to Sales (P/S): 22.67
• P/FCF Ratio: 136.55
• Enterprise Value/Market Cap: 1.28
• Enterprise Value/Revenue: 23.32
• Enterprise Value/Gross Profit: 25.57
• Enterprise Value/Ebitda: 147.58
• 1Y Price Target: $254.55
• Price Target Upside: 30.82% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 22
• EPS Forecast (FY): 2.25
• Revenue Forecast (FY): $2.13B

• Rating: 72 Outperform
• Price Target: $232.00 ▲(19.23% Upside)

Reddit Inc's strong financial performance and impressive earnings call results are the primary drivers of its overall stock score. Despite technical indicators suggesting a bearish trend and a high P/E ratio indicating overvaluation, the company's robust revenue growth and profitability, along with positive user engagement trends, contribute positively to its stock evaluation.

Positive Factors

Revenue Growth

Strong revenue growth indicates Reddit's expanding market presence and effectiveness in monetizing its platform, supporting long-term business sustainability.

Advertising Expansion

The significant growth in advertising revenue underscores Reddit's ability to attract advertisers and leverage its engaged user base, enhancing its revenue model.

Cash Flow Improvement

Improved cash flow enhances Reddit's financial flexibility, enabling reinvestment in growth initiatives and strengthening its balance sheet.

Negative Factors

User Conversion Challenges

Challenges in converting users from logged out to logged in may hinder user base growth and engagement, impacting long-term revenue potential.

Chatbot Traffic Impact

Limited impact of chatbot traffic suggests missed opportunities in leveraging AI for user engagement, potentially affecting future growth.

High Beta

A high beta indicates greater volatility, which could lead to unstable stock performance, affecting investor confidence and long-term investment appeal.

Reddit Inc Class A Business Overview & Revenue Model

Company Description

Reddit 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 Money

Reddit 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 Financial Statement Overview

Summary

Reddit Inc exhibits strong financial health with significant improvements in profitability and cash flow generation. The company has effectively managed its costs and leverage, resulting in robust margins and a solid balance sheet. Continued focus on operational efficiency and cash flow management will be key to sustaining this positive trajectory.

Income Statement

Reddit Inc has shown impressive revenue growth, particularly in the TTM period with a 14.18% increase. The company has achieved a strong gross profit margin of 91.21% in TTM, indicating efficient cost management. The net profit margin has improved significantly from negative figures in previous years to 18.33% in TTM, reflecting enhanced profitability. However, EBIT and EBITDA margins, while positive in TTM, suggest room for improvement in operational efficiency.

Balance Sheet

The balance sheet is robust with a very low debt-to-equity ratio of 0.0096 in TTM, indicating minimal leverage and financial risk. The return on equity has turned positive at 14.94% in TTM, showcasing effective use of equity to generate profits. The equity ratio remains strong, reflecting a solid capital structure. However, the company should continue to focus on maintaining this stability as it scales.

Cash Flow

Cash flow performance is strong, with a remarkable 28.43% growth in free cash flow in TTM. The operating cash flow to net income ratio of 2.25 in TTM indicates healthy cash generation relative to profits. The free cash flow to net income ratio is nearly 1, demonstrating efficient conversion of profits into cash. Continued focus on cash flow management will be crucial as the company grows.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	1.90B	1.30B	804.03M	666.70M	484.92M	228.91M
Gross Profit	1.74B	1.18B	693.02M	561.90M	412.35M	173.88M
EBITDA	301.02M	-544.92M	-126.46M	-164.16M	-124.40M	-57.14M
Net Income	349.15M	-484.28M	-90.82M	-158.55M	-127.90M	-59.17M
Balance Sheet
Total Assets	2.88B	2.34B	1.60B	1.60B	1.65B	524.14M
Cash, Cash Equivalents and Short-Term Investments	2.23B	1.84B	1.21B	1.27B	1.41B	362.64M
Total Debt	25.03M	26.70M	25.75M	19.49M	13.46M	19.93M
Total Liabilities	265.71M	205.85M	155.90M	125.28M	77.63M	65.01M
Stockholders Equity	2.61B	2.13B	1.44B	1.47B	1.57B	459.13M
Cash Flow
Free Cash Flow	509.68M	215.82M	-84.84M	-100.25M	-132.49M	-64.89M
Operating Cash Flow	514.07M	222.07M	-75.11M	-94.02M	-130.19M	-61.84M
Investing Cash Flow	-56.16M	-440.69M	41.29M	-804.18M	170.68M	81.18M
Financing Cash Flow	-62.20M	379.54M	-811.00K	-3.78M	1.18B	8.33M

Reddit Inc Class A Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 194.58
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For RDDT, the sentiment is Negative. The current price of 194.58 is below the 20-day moving average (MA) of 201.43, below the 50-day MA of 221.07, and above the 200-day MA of 166.15, indicating a neutral trend. The MACD of -6.23 indicates Positive momentum. The RSI at 45.15 is Neutral, neither overbought nor oversold. The STOCH value of 20.23 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for RDDT.

Reddit Inc Class A Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
PINS	73 Outperform	$17.40B	9.11	51.49%	―	16.79%	819.94%
RDDT	72 Outperform	$34.80B	107.17	15.22%	―	69.71%	―
YELP	69 Neutral	$2.03B	14.54	20.37%	―	5.35%	33.74%
MTCH	63 Neutral	$7.99B	15.45	―	1.16%	-0.46%	-2.75%
SNAP	62 Neutral	$13.54B	―	-22.38%	―	11.75%	49.19%
Sector *	60 Neutral	$48.67B	4.58	-11.27%	4.14%	2.83%	-41.78%
NXDR	51 Neutral	$654.97M	―	-14.07%	―	6.65%	50.32%

Reddit Inc Class A Corporate Events

Reddit, Inc. Reports Strong Q3 2025 Earnings

Reddit, Inc. Class A’s recent earnings call for Q3 2025 painted a picture of robust growth and profitability, with the company achieving significant milestones. The overall sentiment was positive, driven by impressive revenue growth and profitability achievements. User engagement and advertiser expansion also contributed to the optimistic outlook, although challenges in user conversion and the limited impact of chatbot traffic were noted as areas needing improvement.

Reddit, Inc. Reports Strong Q3 2025 Financial Growth

Reddit, Inc. is a prominent online platform known for its vast network of communities where users engage in discussions on a wide range of topics. Operating in the social media and online community sector, Reddit stands out for its user-driven content and unique community dynamics.

Reddit’s Earnings Call: Strong Growth and Strategic Expansion

Reddit’s latest earnings call painted a picture of robust growth and strategic expansion, with the company showcasing impressive revenue and user base increases. Despite some challenges in traffic acquisition and initiative prioritization, the overall sentiment was overwhelmingly positive, highlighting Reddit’s successful international expansion and new product offerings.