Reddit (NYSE:RDDT) Issues Quarterly Earnings Results

Reddit (NYSE:RDDT) announced its earnings results on Thursday. The company reported $1.25 earnings per share (EPS) for the quarter, beating the consensus estimate of $0.95 by $0.30, Zacks reports. Reddit had a return on equity of 25.48% and a net margin of 28.60%.The business had revenue of $804.91 million during the quarter, compared to analyst estimates of $731.00 million. During the same quarter in the previous year, the business earned $0.45 earnings per share. The company’s revenue for the quarter was up 61.0% compared to the same quarter last year.

Here are the key takeaways from Reddit’s conference call:

• Strong financial performance: Q2 revenue rose 61% year over year to $805 million, advertising revenue increased 64% to $762 million, and adjusted EBITDA margin reached 43%. Operating cash flow more than doubled to $262 million, with last-twelve-month operating cash flow surpassing $1 billion.
• Advertising momentum remained broad-based. Active advertisers grew more than 70%, scaled-channel revenue doubled, conversion volume increased over 100%, and Reddit Max revenue rose more than 150% sequentially as automation and lower-funnel products gained adoption.
• User growth faced search-referral headwinds. Product-driven gains in daily active users were offset by declining and volatile search traffic, particularly late in the quarter; management acknowledged that user retention remains below industry peers and that direct-user growth will take time.
• Management guided to continued growth in Q3, forecasting revenue of $860 million to $870 million and adjusted EBITDA of $385 million to $395 million, or a 45% margin at the midpoint. Reddit also lowered its full-year stock-based compensation outlook and repurchased approximately $235 million of stock, with $760 million remaining under its authorization.
• Reddit is investing heavily in its product roadmap, including improved feed technology, app onboarding, video, search, shopping ads, and SMB automation. Executives also said data-licensing outcomes with major AI companies remain uncertain and will depend on maximizing value across multiple potential uses.

Reddit Trading Up 0.3%

Shares of NYSE RDDT traded up $0.54 during trading hours on Thursday, reaching $178.53. The stock had a trading volume of 11,460,494 shares, compared to its average volume of 3,769,186. Reddit has a 52-week low of $119.27 and a 52-week high of $282.95. The firm has a market cap of $34.37 billion, a price-to-earnings ratio of 50.85 and a beta of 1.93. The business’s fifty day moving average price is $176.74 and its two-hundred day moving average price is $165.09.

Wall Street Analyst Weigh In

Several equities research analysts have recently weighed in on the company. Bank of America reduced their price target on Reddit from $205.00 to $175.00 and set a “neutral” rating on the stock in a report on Thursday, April 2nd. The Goldman Sachs Group reaffirmed a “neutral” rating and issued a $200.00 price objective on shares of Reddit in a research report on Friday, May 1st. Oppenheimer reiterated an “outperform” rating and issued a $225.00 target price on shares of Reddit in a research note on Friday, May 1st. Wedbush reiterated an “outperform” rating on shares of Reddit in a research report on Thursday, July 23rd. Finally, Wells Fargo & Company boosted their target price on shares of Reddit from $176.00 to $187.00 and gave the company an “equal weight” rating in a research note on Tuesday, July 7th. Two investment analysts have rated the stock with a Strong Buy rating, nineteen have given a Buy rating and eleven have given a Hold rating to the company’s stock. Based on data from MarketBeat.com, the company has a consensus rating of “Moderate Buy” and an average price target of $232.23.

Insiders Place Their Bets

In other Reddit news, COO Jennifer L. Wong sold 39,167 shares of the company’s stock in a transaction on Monday, May 18th. The stock was sold at an average price of $158.52, for a total value of $6,208,752.84. Following the completion of the sale, the chief operating officer directly owned 1,088,451 shares in the company, valued at approximately $172,541,252.52. This represents a 3.47% decrease in their position. The sale was disclosed in a filing with the Securities & Exchange Commission, which can be accessed through this hyperlink. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Also, CAO Michelle Marie Reynolds sold 808 shares of the stock in a transaction on Wednesday, July 1st. The stock was sold at an average price of $200.00, for a total value of $161,600.00. Following the transaction, the chief accounting officer directly owned 15,060 shares in the company, valued at $3,012,000. The trade was a 5.09% decrease in their position. Additional details regarding this sale are available in the official SEC disclosure. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Insiders have sold 169,141 shares of company stock worth $28,680,845 in the last ninety days. 28.48% of the stock is owned by company insiders.

Institutional Trading of Reddit

A number of hedge funds have recently added to or reduced their stakes in RDDT. State Street Corp increased its position in Reddit by 6.0% during the 4th quarter. State Street Corp now owns 2,631,332 shares of the company’s stock valued at $604,864,000 after purchasing an additional 149,401 shares during the period. Morgan Stanley lifted its position in shares of Reddit by 11.4% in the 4th quarter. Morgan Stanley now owns 2,372,443 shares of the company’s stock worth $545,354,000 after purchasing an additional 242,709 shares during the period. Invesco Ltd. lifted its position in shares of Reddit by 36.7% in the 4th quarter. Invesco Ltd. now owns 2,033,626 shares of the company’s stock worth $467,470,000 after purchasing an additional 545,685 shares during the period. Bank of America Corp DE boosted its stake in shares of Reddit by 38.4% during the third quarter. Bank of America Corp DE now owns 1,724,560 shares of the company’s stock valued at $396,632,000 after purchasing an additional 478,095 shares in the last quarter. Finally, Wellington Management Group LLP boosted its stake in shares of Reddit by 125.4% during the fourth quarter. Wellington Management Group LLP now owns 1,224,045 shares of the company’s stock valued at $281,371,000 after purchasing an additional 681,076 shares in the last quarter.

Reddit News Roundup

Here are the key news stories impacting Reddit this week:

• Positive Sentiment: Q2 revenue rose 61% year over year to $804.9 million, exceeding the $731 million consensus estimate, while adjusted earnings of $1.25 per share surpassed expectations of approximately $0.95. Net profit reached $253 million, compared with $0.45 per share a year earlier. Reddit Q2 earnings report
• Positive Sentiment: Reddit forecast third-quarter revenue of $860 million to $870 million, above the $829.7 million analyst consensus. Management said AI-powered advertising tools are helping attract marketers and support commercial momentum. Reuters report on Reddit guidance
• Positive Sentiment: KeyCorp upgraded Reddit to “Strong Buy,” adding to recent bullish analyst coverage ahead of the earnings release. KeyCorp upgrade report
• Neutral Sentiment: CEO Steve Huffman argued that Google’s AI Overviews cannot yet replace the value of traditional “10 blue links,” but acknowledged that changes to search are affecting the broader web ecosystem. Reddit CEO comments on Google AI Overviews
• Negative Sentiment: Investors remain worried that Google’s AI search summaries are reducing referrals to Reddit. Management described search traffic as “choppy,” and reports suggested Reddit could reconsider its roughly $60 million-a-year Google content deal if AI-driven search continues to divert traffic. Reddit search referral report
• Negative Sentiment: U.S. user growth showed signs of slowing, increasing uncertainty about future engagement, advertising reach and the sustainability of Reddit’s elevated valuation. Consequently, the strong earnings “beat” did not prevent shares from retreating as AI-search risks dominated investor sentiment. TechCrunch analysis of Reddit earnings

Reddit Company Profile

Reddit is an online social news aggregation, discussion and content-sharing platform organized around user-created communities called “subreddits,” each focused on a particular topic or interest. Registered users submit links, text posts, images and video, and community members vote and comment to surface popular content. The site is accessed via its web platform and mobile apps for iOS and Android, and it supports live events such as Ask Me Anything (AMA) sessions and community-driven discussions.

Founded in 2005 by Steve Huffman and Alexis Ohanian, Reddit is headquartered in San Francisco and serves a global audience with particularly large user bases in the United States and other English-speaking markets.