Reddit Faces 15% Pullback, RDDT Stock Tests Support – Break Lower Ahead?
Reddit’s blockbuster second-quarter earnings signaled a major turning point for the social platform, though a swift reversal in share...
Quick overview
- Reddit reported record-breaking Q2 earnings in 2025, with an 18% intraday share price increase driven by strong financial results and AI-driven advertising.
- Despite a recent surge that pushed shares to $283, the stock has since retreated over 16%, raising concerns about support levels.
- The company achieved a net profit of $89 million and a 78% year-over-year revenue increase, highlighting its successful monetization strategies.
- Looking ahead, Reddit anticipates continued growth with projected Q3 revenues between $535 million and $545 million.
Reddit’s blockbuster second-quarter earnings signaled a major turning point for the social platform, though a swift reversal in share price is now testing investor conviction.
Q2 Earnings Spark a Rally
Reddit, Inc. (NASDAQ: RDDT) delivered a record-breaking second quarter in 2025, pushing shares up 18% intraday from $195.91 to close at $198.18. Investors responded enthusiastically to the company’s strong financial results, which highlighted its progress toward profitability. Powered by rapid advances in AI-driven advertising and expanding global operations, Reddit is steadily evolving from a niche U.S. platform into a global digital advertising leader.
The momentum carried shares even higher, reaching $283 last week. However, this surge has since been tested, with the stock retreating more than 16% as sellers gained the upper hand. Traders are now watching closely to see whether the $230 level and the 20-day SMA can hold as support, since a breakdown could mark the beginning of a deeper retracement.
From IPO Uncertainty to Renewed Strength
Reddit’s trajectory since its March 2024 IPO has been anything but smooth. Priced initially at $34 per share, RDDT became a market sensation as enthusiasm for its data monetization and advertising potential fueled rapid gains. By February 2025, shares had skyrocketed more than 680% to $230 before sliding in the months that followed.
RDDT Chart Daily – Leaving Behind the 200 SMA
The company’s most recent earnings-driven rally briefly pushed Reddit’s valuation to $44.44 billion, reviving excitement and reminding investors of its status as one of the most compelling growth stories in the social media space. Yet the sharp reversal following this spike underscores the volatility that continues to define its stock.
Explosive Growth in Financial Results
Reddit’s Q2 performance exceeded expectations across all key metrics. Revenue surged 78% year over year to $500 million, driven largely by an 84% increase in advertising revenue. This growth reflects the success of its AI-powered ad optimization platform, which has enhanced monetization efficiency.
Equally significant, Reddit achieved profitability with a net profit of $89 million, a sharp turnaround from losses in the prior year. Gross margins hit a record 90.8%, while operating cash flow strengthened to $111 million — metrics that confirm the platform’s scalability and improved operating leverage.
Expanding Reach and User Base
User engagement also showed robust growth. Daily Active Users (DAUs) climbed 21% to 110.4 million, with more than half of this figure now coming from outside the U.S. Expansion into France and Brazil, along with machine translation support across 23 languages, helped broaden Reddit’s international presence.
International revenue rose 71% year over year, a slightly slower pace than the 79% increase in domestic ad revenue, but it demonstrates meaningful progress in diversifying the company’s revenue streams.
Outlook and Forward Guidance
Looking ahead, Reddit expects momentum to continue into the third quarter. The company projects revenue between $535 million and $545 million, with adjusted EBITDA in the range of $185 million to $195 million. This guidance suggests further operating leverage as Reddit continues to scale globally.
While near-term volatility in the stock persists, the long-term trajectory points toward a stronger, more profitable platform with growing international influence and deeper monetization capabilities.
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