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Reddit Surges 97% in the Past 6 Months: Is the Stock Worth Buying?
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Key Takeaways
Reddit shares jumped 96.7% in six months, far outpacing the Computer & Technology sector.
Rising user activity, stronger ARPU, and new advertiser tools have powered Reddit's gains.
Reddit's Q3 ad revenue rose 74% as active advertiser counts expanded across all segments.
Reddit (RDDT - Free Report) shares have surged 96.7% in the past six-month period, outperforming the broader Zacks Computer & Technology sector’s rise of 27.4%. The Zacks Internet - Software industry declined 4.9% in the same time frame.
The company’s shares have also outperformed its peers like Pinterest (PINS - Free Report) , Meta Platforms (META - Free Report) and Snap (SNAP - Free Report) . Pinterest, Meta Platforms and Snap are expanding their footprints into advertising to compete in the rapidly growing digital ad market. Pinterest shares have plunged 18.8% and Meta Platforms and Snap shares have lost 6.6% each in the past six-month period.
The outperformance can be attributed to the company’s strong user engagement, including rising daily and weekly active users, gains in Average Revenue Per User (ARPU), and the expansion of advertiser tools such as Dynamic Product Ads (DPA), Reddit Pixel and CAPI.
In the third quarter of 2025, ARPU increased 41% year over year to $5.04, indicating that portfolio expansions are driving higher monetization per user.
RDDT Stock's Performance
Image Source: Zacks Investment Research
RDDT Benefits From Strong Demand for AI Tools
Reddit is benefiting from its investment in AI-powered tools, which are driving the company’s user engagement. In the third quarter of 2025, RDDT reported 116 million daily active users and 444 million weekly active users, both increasing 20% year over year.
The company is expanding its search-led engagement through its AI-powered features. The introduction of Reddit Answers, a feature that uses community-driven insights to enhance search functionality, has been noteworthy.
In the third quarter of 2025, more than 75 million people searched on Reddit weekly, showcasing the growing popularity of this feature. The company also integrated Reddit Answers into its core search functionality, increasing visibility across conversations and expanding its reach to non-English languages, including Spanish, German, Italian, French, and Portuguese.
AI infusion is driving the international user base. The company implemented machine translation in 30 languages and developed localized content frameworks to cater to specific interests in countries like India, Brazil, Germany, and France. In the third quarter of 2025, International ARPU rose 39% year over year to $1.84.
Reddit Benefits From Expanding Ad Demand
Reddit’s expanding portfolio has been a major growth driver. The company is well placed to benefit from the growing demand for interest and context-based digital ads.
To support campaign performance and advertiser outcomes, the company has introduced tools like Reddit Pixel, Conversion API (CAPI) and DPA. This is driving advertiser adoption and delivering strong performance outcomes.
In the third quarter of 2025, Advertising revenues surged 74% year over year to $549 million, driven by a combination of expanding relationships with existing advertisers, acquiring new customers and diversifying its advertiser base across large, mid-market and SMB businesses.
The total active advertiser count expanded by more than 75% year over year, as Reddit added new accounts across large, mid-market and Small and Medium-sized Businesses (SMB).
Reddit Earnings Estimates Show Upward Trend
RDDT’s expanding portfolio and rising user engagements are expected to drive the company’s top-line growth.
For the fourth quarter of 2025, RDDT expects revenues between $655 million and $665 million. The Zacks Consensus Estimate for fourth-quarter revenues is pegged at $668.52 million, indicating year-over-year growth of 56.30%.
For the fourth quarter, the consensus mark for earnings is pegged at 97 cents per share, which has decreased by a penny over the past 30 days. This indicates year-over-year growth of 169.44%.
For 2025, the Zacks Consensus Estimate for revenues is pegged at $2.12 billion, indicating year-over-year growth of 62.78%. The consensus mark for earnings is pegged at $2.35 per share, which has remained unchanged over the past 30 days. This indicates year-over-year growth of 170.57%.
Reddit’s stock is currently trading at a premium, as suggested by the Value Score of F.
In terms of the forward 12-month Price/Sales ratio, RDDT is trading at 14.44, higher than its median of 14.39 and the broader Zacks Computer & Technology sector’s 6.72.
Price/Sales (F12M)
Image Source: Zacks Investment Research
Conclusion
Reddit’s prospects benefit from an expanding advertising business, an expanding clientele, and an improved user experience with upgraded search and discovery features. These factors justify the company’s premium valuation.
RRDT stock currently sports a Zacks Rank #1 (Strong Buy) and has a Growth Score of A, a favorable combination that offers a strong investment opportunity, per the Zacks Proprietary methodology. You can see the complete list of today’s Zacks #1 Rank stocks here.
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Reddit Surges 97% in the Past 6 Months: Is the Stock Worth Buying?
Key Takeaways
Reddit (RDDT - Free Report) shares have surged 96.7% in the past six-month period, outperforming the broader Zacks Computer & Technology sector’s rise of 27.4%. The Zacks Internet - Software industry declined 4.9% in the same time frame.
The company’s shares have also outperformed its peers like Pinterest (PINS - Free Report) , Meta Platforms (META - Free Report) and Snap (SNAP - Free Report) . Pinterest, Meta Platforms and Snap are expanding their footprints into advertising to compete in the rapidly growing digital ad market. Pinterest shares have plunged 18.8% and Meta Platforms and Snap shares have lost 6.6% each in the past six-month period.
The outperformance can be attributed to the company’s strong user engagement, including rising daily and weekly active users, gains in Average Revenue Per User (ARPU), and the expansion of advertiser tools such as Dynamic Product Ads (DPA), Reddit Pixel and CAPI.
In the third quarter of 2025, ARPU increased 41% year over year to $5.04, indicating that portfolio expansions are driving higher monetization per user.
RDDT Stock's Performance
Image Source: Zacks Investment Research
RDDT Benefits From Strong Demand for AI Tools
Reddit is benefiting from its investment in AI-powered tools, which are driving the company’s user engagement. In the third quarter of 2025, RDDT reported 116 million daily active users and 444 million weekly active users, both increasing 20% year over year.
The company is expanding its search-led engagement through its AI-powered features. The introduction of Reddit Answers, a feature that uses community-driven insights to enhance search functionality, has been noteworthy.
In the third quarter of 2025, more than 75 million people searched on Reddit weekly, showcasing the growing popularity of this feature. The company also integrated Reddit Answers into its core search functionality, increasing visibility across conversations and expanding its reach to non-English languages, including Spanish, German, Italian, French, and Portuguese.
AI infusion is driving the international user base. The company implemented machine translation in 30 languages and developed localized content frameworks to cater to specific interests in countries like India, Brazil, Germany, and France. In the third quarter of 2025, International ARPU rose 39% year over year to $1.84.
Reddit Benefits From Expanding Ad Demand
Reddit’s expanding portfolio has been a major growth driver. The company is well placed to benefit from the growing demand for interest and context-based digital ads.
To support campaign performance and advertiser outcomes, the company has introduced tools like Reddit Pixel, Conversion API (CAPI) and DPA. This is driving advertiser adoption and delivering strong performance outcomes.
In the third quarter of 2025, Advertising revenues surged 74% year over year to $549 million, driven by a combination of expanding relationships with existing advertisers, acquiring new customers and diversifying its advertiser base across large, mid-market and SMB businesses.
The total active advertiser count expanded by more than 75% year over year, as Reddit added new accounts across large, mid-market and Small and Medium-sized Businesses (SMB).
Reddit Earnings Estimates Show Upward Trend
RDDT’s expanding portfolio and rising user engagements are expected to drive the company’s top-line growth.
For the fourth quarter of 2025, RDDT expects revenues between $655 million and $665 million. The Zacks Consensus Estimate for fourth-quarter revenues is pegged at $668.52 million, indicating year-over-year growth of 56.30%.
For the fourth quarter, the consensus mark for earnings is pegged at 97 cents per share, which has decreased by a penny over the past 30 days. This indicates year-over-year growth of 169.44%.
For 2025, the Zacks Consensus Estimate for revenues is pegged at $2.12 billion, indicating year-over-year growth of 62.78%. The consensus mark for earnings is pegged at $2.35 per share, which has remained unchanged over the past 30 days. This indicates year-over-year growth of 170.57%.
Reddit Inc. Price and Consensus
Reddit Inc. price-consensus-chart | Reddit Inc. Quote
RDDT Stock Overvalued
Reddit’s stock is currently trading at a premium, as suggested by the Value Score of F.
In terms of the forward 12-month Price/Sales ratio, RDDT is trading at 14.44, higher than its median of 14.39 and the broader Zacks Computer & Technology sector’s 6.72.
Price/Sales (F12M)
Image Source: Zacks Investment Research
Conclusion
Reddit’s prospects benefit from an expanding advertising business, an expanding clientele, and an improved user experience with upgraded search and discovery features. These factors justify the company’s premium valuation.
RRDT stock currently sports a Zacks Rank #1 (Strong Buy) and has a Growth Score of A, a favorable combination that offers a strong investment opportunity, per the Zacks Proprietary methodology. You can see the complete list of today’s Zacks #1 Rank stocks here.