We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
RDDT's User-Friendly Features Boost Ad Revenue: More Upside Ahead?
Read MoreHide Full Article
Key Takeaways
RDDT posted a 74% year-over-year jump in advertising revenue to $549 million in the third quarter of 2025.
RDDT reached 116 million daily active users and 444 million weekly active users, both up 20% year over year.
RDDT saw active advertisers climb 75% year over year as automation tools improved campaign efficiency.
Reddit (RDDT - Free Report) is benefiting from its strong focus on enhancing user-friendly features, which is driving significant growth in user engagement and ad revenue. In the third quarter of 2025, Advertising revenues surged 74% year-over-year to $549 million.
The company is also 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.
Automation tools, including auto bidding and auto targeting, simplify campaign management and improve efficiency, attracting advertisers across various business sizes. These advancements have led to a 75% year-over-year increase in active advertiser count in the third quarter of 2025.
Reddit 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, and Dynamic Product Ads.
Reddit has also introduced innovative tools like Reddit Pro for publishers, enabling them to sync feeds, import articles, and use AI-powered tools to identify relevant communities. These tools enhance user engagement and create opportunities for advertisers to connect with their target audiences in a more meaningful way.
RDDT Faces Stiff Competition
RDDT is facing stiff competition from competitors like Meta Platforms (META - Free Report) and Snap (SNAP - Free Report) , which are also expanding into advertising to compete in the rapidly growing digital ad market.
Snap is benefiting from strong revenue growth driven by improved advertising demand and the expansion of direct revenue streams. In the third quarter of 2025, Snap’s advertising revenues rose 5% year over year to $1.32 billion, driven primarily by growth in Direct Response (DR) advertising revenue, which increased 8% year over year. Growth in DR advertising revenue was primarily driven by strong demand for Pixel Purchase and App Purchase optimizations.
Meta Platforms’ focus on integrating AI into its platforms, which include Facebook, WhatsApp, Instagram, Messenger, and Threads, is driving user engagement to boost ad revenues. In the third quarter of 2025, Meta Platform’s advertising revenues increased 25.6% year over year to $50.08 billion and accounted for 97.7% of third-quarter revenues. At cc, revenues increased 25% year over year.
RDDT’s Share Price Performance, Valuation, and Estimates
RDDT’s shares have gained 58.5% in the trailing six-month period, outperforming the broader Zacks Computer & Technology sector’s return of 22.1% and the Internet - Software industry’s decline of 5.1%.
RDDT Stock's Performance
Image Source: Zacks Investment Research
RDDT shares are overvalued, with a forward 12-month Price/Sales of 14.48X compared with the Computer & Technology sector’s 6.51X. RDDT has a Value Score of F.
RDDT Valuation
Image Source: Zacks Investment Research
The consensus mark for 2025 earnings is pegged at $2.35 per share, unchanged over the past 30 days. This suggests 170.57% year-over-year growth.
Image: Bigstock
RDDT's User-Friendly Features Boost Ad Revenue: More Upside Ahead?
Key Takeaways
Reddit (RDDT - Free Report) is benefiting from its strong focus on enhancing user-friendly features, which is driving significant growth in user engagement and ad revenue. In the third quarter of 2025, Advertising revenues surged 74% year-over-year to $549 million.
The company is also 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.
Automation tools, including auto bidding and auto targeting, simplify campaign management and improve efficiency, attracting advertisers across various business sizes. These advancements have led to a 75% year-over-year increase in active advertiser count in the third quarter of 2025.
Reddit 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, and Dynamic Product Ads.
Reddit has also introduced innovative tools like Reddit Pro for publishers, enabling them to sync feeds, import articles, and use AI-powered tools to identify relevant communities. These tools enhance user engagement and create opportunities for advertisers to connect with their target audiences in a more meaningful way.
RDDT Faces Stiff Competition
RDDT is facing stiff competition from competitors like Meta Platforms (META - Free Report) and Snap (SNAP - Free Report) , which are also expanding into advertising to compete in the rapidly growing digital ad market.
Snap is benefiting from strong revenue growth driven by improved advertising demand and the expansion of direct revenue streams. In the third quarter of 2025, Snap’s advertising revenues rose 5% year over year to $1.32 billion, driven primarily by growth in Direct Response (DR) advertising revenue, which increased 8% year over year. Growth in DR advertising revenue was primarily driven by strong demand for Pixel Purchase and App Purchase optimizations.
Meta Platforms’ focus on integrating AI into its platforms, which include Facebook, WhatsApp, Instagram, Messenger, and Threads, is driving user engagement to boost ad revenues. In the third quarter of 2025, Meta Platform’s advertising revenues increased 25.6% year over year to $50.08 billion and accounted for 97.7% of third-quarter revenues. At cc, revenues increased 25% year over year.
RDDT’s Share Price Performance, Valuation, and Estimates
RDDT’s shares have gained 58.5% in the trailing six-month period, outperforming the broader Zacks Computer & Technology sector’s return of 22.1% and the Internet - Software industry’s decline of 5.1%.
RDDT Stock's Performance
Image Source: Zacks Investment Research
RDDT shares are overvalued, with a forward 12-month Price/Sales of 14.48X compared with the Computer & Technology sector’s 6.51X. RDDT has a Value Score of F.
RDDT Valuation
Image Source: Zacks Investment Research
The consensus mark for 2025 earnings is pegged at $2.35 per share, unchanged over the past 30 days. This suggests 170.57% year-over-year growth.
Reddit Inc. Price and Consensus
Reddit Inc. price-consensus-chart | Reddit Inc. Quote
RDDT currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.