Reddit Breaks Resistance on Strong Rebound, RDDT Stock Targets $283 Highs
Reddit’s latest earnings-fueled rebound has strengthened its long-term narrative, even as recent volatility challenges investor confidence.
Quick overview
- Reddit's recent earnings report has reignited investor confidence, pushing its stock back above $200 after a significant dip.
- The company reported a 68% year-over-year revenue increase, reaching $585 million, and beat earnings expectations with $0.80 per share.
- Despite strong financial performance, concerns linger about slowing user growth in the U.S., which could impact future momentum.
- Reddit's global expansion and improved advertising capabilities are positioning it as a key player in the digital advertising market.
Reddit’s latest earnings-fueled rebound has strengthened its long-term narrative, even as recent volatility challenges investor confidence.
Reddit’s Momentum Reignited
Reddit’s powerful second and third quarter performance has marked a decisive shift for the platform as it moves deeper into profitability and expands its global footprint. The company’s third-quarter earnings for 2025 reignited a strong rally, sending the stock back above $200 and reenergizing bullish sentiment.
Rapid improvement in advertising capabilities, better monetization tools, and broader international growth have helped Reddit transform from a niche U.S.-centric community platform into a fast-rising player in the global digital advertising market.
RDDT Chart Weekly -Finding Support at the 50 SMA
Despite this momentum, the stock’s path has not been smooth. After reaching a record high of $283 in September, shares tumbled more than $110 to dip below $180. Technical support emerged at the 50-week SMA, leading to a sharp rebound of 28% over just two weeks. This recovery has renewed speculation about whether Reddit is preparing for another push toward previous highs.
A Post-IPO Journey Marked by Surges and Setbacks
Since debuting on the public market in March 2024 at an initial price of $34, Reddit has experienced a turbulent yet dramatic ascent. Early enthusiasm around the platform’s untapped advertising potential and lucrative data-licensing opportunities propelled shares higher, with the stock climbing more than 680% to reach $230 by February 2025. Though subsequent months brought pullbacks, the stock has since reclaimed momentum, breaking beyond that February peak and approaching its earlier record.
Reddit’s most recent earnings surge temporarily lifted its valuation to $44.36 billion, reaffirming its position as one of the most dynamic and high-growth companies in the social media sector. Still, the abrupt reversal that followed highlights the volatility investors must navigate as the company continues evolving.
Financial Strength Behind the Rally
The latest quarter showcased Reddit at its strongest operational stance to date. The company reported earnings per share of $0.80, beating expectations of $0.51, while revenue reached $585 million, surpassing the $546 million consensus. Year-over-year, sales increased an impressive 68%, and net income surged to $163 million, far above the $30 million recorded a year earlier. This acceleration reflects improved ad-targeting capabilities, higher engagement, and growing traction in international markets.
Reddit Q3 Earnings Report
A Strong Beat Across Metrics Reinforces Reddit’s Revenue Momentum
Financial Performance Highlights
Earnings Per Share
- Reddit delivered $0.80 EPS, easily beating expectations of $0.51, reflecting better cost control and higher operating leverage.
Revenue Growth
- Total revenue reached $585 million, topping forecasts of $546 million. This represents a 68% year-over-year surge, driven primarily by advertising and data-licensing strength.
Net Income Expansion
- Net income hit $163 million, a dramatic improvement from $30 million a year earlier, underscoring operational efficiency and faster scaling across its business lines.
Fourth-Quarter Outlook
Revenue Guidance
- Reddit expects Q4 sales between $655 million and $665 million, well ahead of Wall Street’s $638 million estimate, suggesting continued momentum into year-end.
Adjusted Earnings Forecast
- Projected adjusted earnings of $275 million to $285 million also beat analyst expectations of $259 million, indicating sustained margin strength.
User Monetization Trends
Global ARPU
- Global average revenue per user reached $5.04, outperforming consensus expectations of $4.82, supported by improved ad tools and stronger engagement from key communities.
Regional Revenue Breakdown
United States
- U.S. revenue came in at $480 million, surpassing expectations of $445 million, maintaining the company’s position as a top-performing ad platform domestically.
International Segment
- International revenue rose to $105 million, slightly above estimates and indicating consistent global adoption despite slower overseas ad markets.
Data Licensing and Other Revenue Streams
Other Revenue Category
- Reddit generated $36 million in “Other revenue,” up 7% year-over-year, supported heavily by the company’s fast-growing data licensing partnerships with major players including Google and OpenAI.
User Growth Metrics
Global Daily Active Uniques (DAUq)
- Global DAUq increased 19% year-over-year to 116 million, beating expectations of 114 million, marking ongoing platform stickiness and rising engagement.
U.S. Logged-In Users
- U.S. logged-in DAUq rose 7% to 23.1 million, slightly slower compared with a 12% increase in Q2. This marks the fifth consecutive quarter of slowing U.S. logged-in user growth—highlighting a cooling trend in Reddit’s most lucrative market.
Guidance for the months ahead points to continued business expansion, bolstered by robust data-licensing partnerships and improving monetization strategies. However, one lingering concern remains the slowing pace of logged-in user growth in the United States—Reddit’s most valuable market—which will be a key factor in sustaining long-term momentum.
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