Reddit Inc Class A (RDDT) AI Stock Analysis

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Reddit Inc Class A

(NYSE:RDDT)

Select Model

Outperform 75 (OpenAI - 4o)

Rating:75Outperform

Price Target:

$246.00

▼(-3.08% Downside)

Reddit Inc's strong financial performance and impressive earnings call results are the primary drivers of its overall stock score. While technical indicators suggest moderate momentum, the high P/E ratio indicates potential overvaluation. The company's focus on growth and profitability, coupled with user engagement and advertiser expansion, supports a positive outlook, but valuation concerns temper the overall score.

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 (RDDT) vs. SPDR S&P 500 ETF (SPY)

Market Cap

$48.10B

Dividend YieldN/A

Average Volume (3M)3.61M

Price to Earnings (P/E)140.7

Beta (1Y)2.33

Revenue Growth69.71%

EPS GrowthN/A

CountryUS

Employees2,233

SectorCommunication Services

Sector Strength97

IndustryInternet Content & Information

Share Statistics

EPS (TTM)0.80

Shares Outstanding137,824,830

10 Day Avg. Volume2,182,672

30 Day Avg. Volume3,612,696

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 Cap0.92

Enterprise Value/Revenue23.32

Enterprise Value/Gross Profit25.57

Enterprise Value/Ebitda147.58

Forecast

1Y Price Target

$257.39

Price Target Upside1.41% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering19

EPS Forecast (FY)3.85

Revenue Forecast (FY)$2.97B

Reddit Inc Class A Business Overview & Revenue Model

Company DescriptionReddit, Inc. operates a website that organizes digital communities. It organizes communities based on specific interests that enable users to engage in conversations by sharing experiences, submitting links, uploading images and videos, and replying to one another. The company was founded in 2005 and is headquartered in San Francisco, California. Reddit, Inc. operates as a subsidiary of Advance Publications, Inc.

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:

The Fly

Reddit Inc Class A Earnings Call Summary

Earnings Call Date:Oct 30, 2025

(Q3-2025)

% Change Since: |

Next Earnings Date:Feb 18, 2026

Earnings Call Sentiment Positive

The earnings call presented a strong performance for Reddit in Q3 2025, with notable achievements in revenue growth and profitability. User engagement and advertiser expansion also showed positive trends. However, challenges remain in improving user conversion and leveraging chatbot traffic.

Q3-2025 Updates

Positive Updates

Significant Revenue Growth

Revenue reached $585 million, up 68% year-over-year, demonstrating strong growth.

Profitability Milestone Achieved

Achieved a targeted adjusted EBITDA margin of 40%, a profitability goal set at the IPO, with GAAP net income of $163 million and a net margin of 28%.

User Engagement and Growth

Daily active users (DAU) and weekly active users (WAU) both grew around 20% year-over-year, with international DAU growing 31%.

Advertising Business Expansion

Advertising revenue reached $549 million, up 74% year-over-year, with the total active advertiser count expanding by over 75% year-over-year.

Cash Flow and Balance Sheet Strength

Generated $183 million in cash flow, with cash and cash equivalents on the balance sheet now at $2.2 billion.

Negative Updates

Challenges in User Conversion

Need to improve onboarding and retention strategies, especially for converting logged out users to logged in users.

Limited Impact of Chatbot Traffic

Traffic from chatbots is not a significant driver for the platform currently.

Company Guidance

During Reddit's Q3 2025 earnings call, the company reported significant growth and positive financial performance. Daily Active Users (DAUq) reached 116 million, and Weekly Active Users (WAUq) were 444 million, both growing approximately 20% year-over-year. Revenue for the quarter was $585 million, marking a 68% increase from the previous year, with advertising revenue growing 74% to $549 million. Reddit achieved a net income of $163 million, reflecting a 28% net margin, and an adjusted EBITDA margin of 40%, surpassing its profitability goal set during its IPO. The company also reported a free cash flow margin of 31% and maintained a gross margin of 91%. Looking forward, Reddit anticipates Q4 revenue between $655 million and $665 million, representing a 53% to 55% increase year-over-year, with an adjusted EBITDA margin expected to reach 42%. The company continues to focus on scaling monetization, improving user experience, and expanding both domestically and internationally, with a strong emphasis on enhancing its core product and search capabilities.

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

Positive

Last Price253.81

Price Trends

50DMA

216.14

Positive

100DMA

220.93

Positive

200DMA

176.19

Positive

Market Momentum

MACD

8.42

Negative

RSI

69.40

Neutral

STOCH

88.25

Negative

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 253.81 is above the 20-day moving average (MA) of 233.53, above the 50-day MA of 216.14, and above the 200-day MA of 176.19, indicating a bullish trend. The MACD of 8.42 indicates Negative momentum. The RSI at 69.40 is Neutral, neither overbought nor oversold. The STOCH value of 88.25 is Negative, 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 (60)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
PINS	77 Outperform	$18.29B	9.52	51.49%	―	16.79%	819.94%
YELP	77 Outperform	$1.88B	13.36	20.37%	―	5.35%	33.74%
RDDT	75 Outperform	$48.10B	140.72	15.22%	―	69.71%	―
MTCH	66 Neutral	$7.73B	15.23	―	2.32%	-0.46%	-2.75%
SNAP	63 Neutral	$15.11B	-29.24	-22.38%	―	11.75%	49.19%
Sector *	60 Neutral	$48.67B	4.58	-11.27%	4.14%	2.83%	-41.78%
NXDR	58 Neutral	$803.82M	-12.70	-14.07%	―	6.65%	50.32%

* Communication Services Sector Average

Performance Comparison

RDDT

Reddit Inc Class A

255.50

83.49

48.54%

YELP

Yelp

30.29

-8.73

-22.37%

SNAP

Snap

8.62

-3.42

-28.41%

PINS

27.49

-3.38

-10.95%

MTCH

Match Group

32.59

1.46

4.70%

NXDR

Nextdoor Holdings

2.06

-0.30

-12.71%

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: Nov 26, 2025