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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:
$122.00
▲(6.06%Upside)
Positive Factors
Financial Performance
RDDT reported very strong 1Q25 results with a 61% year-over-year revenue growth.
Revenue Growth
The broader launch of Dynamic Product Ads is likely to drive some incremental revenue growth during the holiday shopping period.
User Growth
AI-driven language translations are expected to continue to drive RDDT's international daily active user growth.
Negative Factors
Growth Limitations
Premium valuation already reflects growth and margin upside, which could limit further stock price increase.
Stock Decline
Investor focus on Google dependency risk has intensified, and Reddit shares have declined 9% since the news.
Traffic Concerns
There are ongoing traffic concerns due to Reddit's dependency on Google traffic and the recent AI integration in search, until more conclusive data is available.
Reddit Inc Class A (RDDT) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$21.61B
Dividend YieldN/A
Average Volume (3M)9.10M
Price to Earnings (P/E)178.0
Beta (1Y)2.51
Revenue Growth64.12%
EPS GrowthN/A
CountryUS
Employees2,233
SectorGeneral
Sector StrengthN/A
IndustryInternet Content & Information
Share Statistics
EPS (TTM)0.13
Shares Outstanding129,546,500
10 Day Avg. Volume6,661,451
30 Day Avg. Volume9,101,244
Financial Highlights & Ratios
PEG Ratio-3.23
Price to Book (P/B)3.92
Price to Sales (P/S)0.00
P/FCF Ratio-57.61
Enterprise Value/Market Cap0.25
Enterprise Value/Revenue1.10
Enterprise Value/Gross Profit4.06
Enterprise Value/Ebitda-3.06
Forecast
1Y Price Target
$147.71Price Target Upside28.41% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering23
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 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:May 01, 2025
(Q1-2025)
| % Change Since: -3.17%|
Next Earnings Date:Aug 12, 2025
Earnings Call Sentiment Positive
The earnings call reflected strong financial performance with significant revenue and user growth, successful international expansion, and innovative product enhancements. However, concerns about search traffic volatility and moderation challenges were noted.Q1-2025 Updates
Positive Updates
Impressive Revenue Growth
Reddit reported a revenue of $392 million, marking a 61% year-over-year increase, sustaining a third consecutive quarter of growth over 60%.
Significant User Growth
Reddit ended the quarter with 401 million weekly and 108 million daily users, both up 31% year-over-year.
Strong Advertising Revenue
Advertising revenue grew 61% year-over-year to $359 million, with broad-based strength across objectives, channels, verticals, and geographies.
International Expansion Success
International ad revenue grew 83% year-over-year, the fastest growth rate in three years, with focus markets like France, Spain, and Brazil growing nearly twice as fast as total international users.
Positive EBITDA and Cash Flow
Adjusted EBITDA hit $115 million with a margin of 29%, and operating cash flow reached $128 million, the highest ever, with a free cash flow margin of 32%.
Innovative Product Developments
Reddit Answers, an AI search feature, reached 1 million weekly users and is undergoing global expansion. Machine translation is now available in 13 languages, aiding international growth.
Negative Updates
Search Traffic Volatility
Reddit experienced variability in search traffic due to changes in Google's algorithm, which could lead to potential short-term disruptions in user growth.
Moderation Challenges
The need to evolve account creation processes to combat fake accounts and bots was highlighted, indicating ongoing challenges in maintaining content quality and moderation.
Company Guidance
During Reddit's Q1 2025 earnings call, the company provided robust financial guidance, highlighting a continuation of its strong growth trajectory. Reddit reported a 61% year-over-year increase in revenue, reaching $392 million for the quarter. The platform's advertising business played a key role, contributing $359 million in revenue, also up 61% from the previous year. Reddit's user metrics were equally impressive, with weekly active users reaching 401 million and daily active users hitting 108 million, both reflecting a 31% year-over-year increase. The company also reported an adjusted EBITDA of $115 million, with a margin of 29%, and a GAAP net income of $26 million. Looking ahead to Q2 2025, Reddit projects revenue between $410 million and $430 million, with an expected adjusted EBITDA of $110 million to $130 million, indicating year-over-year growth of 46% to 53% and 180% to 230%, respectively. These metrics underscore Reddit's strategic focus on expanding its user base, enhancing its advertising capabilities, and leveraging its unique community-driven platform for sustained growth.Reddit Inc Class A Financial Statement Overview
Summary
Reddit Inc demonstrates strong financial health with significant revenue growth, a return to profitability, and strong cash flow generation. The balance sheet is well-capitalized with minimal debt and high equity, providing financial stability.Income Statement
Reddit Inc has shown strong revenue growth with a 12.2% increase in TTM compared to the previous year, driven by robust user engagement. The gross profit margin remains high at 91.1%, indicating efficient operation. However, the net profit margin improved to 8.1% in the TTM, a significant turnaround from previous losses, showing improved cost management and profitability.85
Very Positive
Balance Sheet
The balance sheet is strong with a low debt-to-equity ratio of 0.01, reflecting minimal leverage and financial stability. Return on equity is positive at 5.3% in the TTM, reflecting improved profitability. The equity ratio stands at 91%, indicating a solid capital structure with high equity and low liabilities.78
Positive
Cash Flow
Cash flow from operations increased significantly, with a free cash flow growth rate of 45.1% in the TTM. The company has successfully improved its free cash flow to net income ratio, indicating strong cash generation ability relative to earnings. Operating cash flow to net income ratio is robust at 2.71, showcasing strong cash conversion efficiency.82
Very Positive
| Breakdown | |||||
| TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 1.45B | 1.30B | 804.03M | 666.70M | 484.92M | 228.91M | Gross Profit |
| 1.32B | 1.18B | 693.02M | 561.90M | 412.35M | 173.88M | EBIT |
| 32.59M | -560.57M | -140.16M | -172.16M | -127.21M | -62.56M | EBITDA |
| 28.85M | -560.57M | -126.46M | -164.16M | -124.40M | -60.62M | Net Income Common Stockholders |
| 116.95M | -484.28M | -90.82M | -158.55M | -127.90M | -59.17M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 1.95B | 1.84B | 1.21B | 1.27B | 1.41B | 362.64M | Total Assets |
| 2.44B | 2.34B | 1.60B | 1.60B | 1.65B | 524.14M | Total Debt |
| 26.55M | 26.70M | 25.75M | 19.49M | 13.46M | 19.93M | Net Debt |
| -609.18M | -535.39M | -375.43M | -416.32M | -1.32B | -92.02M | Total Liabilities |
| 219.90M | 205.85M | 155.90M | 125.28M | 77.63M | 65.01M | Stockholders Equity |
| 2.22B | 2.13B | 1.44B | 1.47B | 1.57B | 459.13M |
| Cash Flow | Free Cash Flow | ||||
| 313.21M | 215.82M | -84.84M | -100.25M | -132.49M | -64.89M | Operating Cash Flow |
| 317.58M | 222.07M | -75.11M | -94.02M | -130.19M | -61.84M | Investing Cash Flow |
| -582.29M | -440.69M | 41.29M | -804.18M | 170.68M | 81.18M | Financing Cash Flow |
| -68.13M | 379.54M | -811.00K | -3.78M | 1.18B | 8.33M |
Reddit Inc Class A Technical Analysis
Positive
115.03
Price Trends
108.12
Positive
135.48
Negative
124.32
Negative
Market Momentum
1.78
Negative
53.89
Neutral
59.74
Neutral
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 115.03 is above the 20-day moving average (MA) of 110.37, above the 50-day MA of 108.12, and below the 200-day MA of 124.32, indicating a neutral trend. The MACD of 1.78 indicates Negative momentum. The RSI at 53.89 is Neutral, neither overbought nor oversold. The STOCH value of 59.74 is Neutral, 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 (57)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
77 Outperform | $23.76B | 12.62 | 48.41% | ― | 17.81% | 1175.52% | |
76 Outperform | $27.96B | 21.42 | 14.37% | 0.98% | 4.59% | 83.27% | |
74 Outperform | $30.61B | 8.67 | 9.85% | ― | -1.33% | 32.92% | |
73 Outperform | $21.61B | 177.95 | 5.77% | ― | 64.12% | ― | |
68 Neutral | $7.77B | 15.64 | -865.98% | 2.40% | 0.40% | -11.05% | |
63 Neutral | $14.19B | ― | -23.97% | ― | 14.91% | 59.90% | |
57 Neutral | $4.90B | 18.92 | -17.01% | 7.26% | 13.61% | -24.47% |
* General Sector Average
Performance Comparison
RDDT
Reddit Inc Class A
115.03
51.07
79.85%
BIDU
Baidu
87.81
-6.18
-6.58%
SNAP
Snap
8.57
-7.04
-45.10%
TME
Tencent Music Entertainment Group
18.58
3.91
26.65%
PINS
Pinterest
34.75
-8.48
-19.62%
MTCH
Match Group
31.54
0.31
0.99%
Reddit Inc Class A Corporate Events
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.
The most recent analyst rating on (RDDT) stock is a Hold with a $190.00 price target. To see the full list of analyst forecasts on Reddit Inc Class A stock, see the RDDT Stock Forecast page.
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.