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Reddit Benefits From Strong User Growth: A Sign for More Upside?
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Key Takeaways
Reddit reported 121M DAUs ( 19%) and 471M WAUs ( 24%) in Q4 2025, signaling strong user growth.
RDDT's ad revenue jumped 75% YoY to $690M, driven by ML tools, new formats and rising advertisers.
RDDT expects Q1 revenues in the range of $595M-$605M, supported by higher engagement and platform expansion.
Reddit (RDDT - Free Report) is benefiting from strong user growth, which underscores its potential for continued expansion and increased revenue opportunities. In the fourth quarter of 2025, Reddit reported 121 million daily active users (DAUs), a 19% year-over-year increase, and 471 million weekly active users (WAUs), up 24% year over year.
A key driver of this growth has been Reddit’s focus on enhancing its consumer product offerings. The company has prioritized improving new user onboarding and integrating its search interfaces, which have been a key catalyst. Reddit Answers, its AI-powered search feature, has seen a remarkable increase in usage, with weekly queries growing from 1 million to 15 million over the past year. In the fourth quarter of 2025, Weekly search activity on Reddit increased significantly, with more than 80 million people searching directly on the platform, up from 60 million a year ago.
Reddit’s strong user growth is also driving its advertising business, which grew 75% year over year in the fourth quarter of 2025 to $690 million. The platform's investments in machine learning and new ad formats, such as shopping ads and Reddit Max campaigns, are enhancing ad performance and attracting a broader base of advertisers. With a total active advertiser count growing by more than 75% year over year, Reddit is successfully expanding its reach across large customers, mid-market businesses and small-to-medium businesses.
RDDT’s expanding portfolio and rising user engagements are expected to drive the company’s top-line growth. For the first quarter of 2026, RDDT expects revenues between $595 million and $605 million.
RDDT Faces Stiff Competition
RDDT is facing stiff competition from competitors like Pinterest (PINS - Free Report) and Snap (SNAP - Free Report) , which are also expanding into advertising to compete in the rapidly growing digital ad market.
Snap has reached 946 million monthly active users, driven by continued adoption of Augmented Reality Lenses, Spotlight and the My AI chatbot. Snap’s global community reached 474 million DAUs in the fourth quarter of 2025, up 5% year over year.
Pinterest is benefiting from solid user engagement across all regions. In the fourth quarter of 2025, Pinterest witnessed 12% year-over-year growth in global monthly active users to 619 million.
RDDT’s Share Price Performance, Valuation, and Estimates
RDDT shares have plunged 40.8% in the year-to-date period, underperforming the broader Zacks Computer & Technology sector and the Internet - Software industry’s decline of 6.1% and 18.2%, respectively.
RDDT Stock Performance
Image Source: Zacks Investment Research
RDDT shares are overvalued, with a forward 12-month Price/Sales of 7.58X compared with the Computer & Technology sector’s 5.81X. RDDT has a Value Score of D.
RDDT Valuation
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for 2026 earnings is pegged at $4.02 per share, which remained unchanged over the past 30 days. This suggests 53.44% year-over-year growth.
View the Zacks #1 Rank List
Image: Bigstock
Reddit Benefits From Strong User Growth: A Sign for More Upside?
Key Takeaways
Reddit (RDDT - Free Report) is benefiting from strong user growth, which underscores its potential for continued expansion and increased revenue opportunities. In the fourth quarter of 2025, Reddit reported 121 million daily active users (DAUs), a 19% year-over-year increase, and 471 million weekly active users (WAUs), up 24% year over year.
A key driver of this growth has been Reddit’s focus on enhancing its consumer product offerings. The company has prioritized improving new user onboarding and integrating its search interfaces, which have been a key catalyst. Reddit Answers, its AI-powered search feature, has seen a remarkable increase in usage, with weekly queries growing from 1 million to 15 million over the past year. In the fourth quarter of 2025, Weekly search activity on Reddit increased significantly, with more than 80 million people searching directly on the platform, up from 60 million a year ago.
Reddit’s strong user growth is also driving its advertising business, which grew 75% year over year in the fourth quarter of 2025 to $690 million. The platform's investments in machine learning and new ad formats, such as shopping ads and Reddit Max campaigns, are enhancing ad performance and attracting a broader base of advertisers. With a total active advertiser count growing by more than 75% year over year, Reddit is successfully expanding its reach across large customers, mid-market businesses and small-to-medium businesses.
RDDT’s expanding portfolio and rising user engagements are expected to drive the company’s top-line growth. For the first quarter of 2026, RDDT expects revenues between $595 million and $605 million.
RDDT Faces Stiff Competition
RDDT is facing stiff competition from competitors like Pinterest (PINS - Free Report) and Snap (SNAP - Free Report) , which are also expanding into advertising to compete in the rapidly growing digital ad market.
Snap has reached 946 million monthly active users, driven by continued adoption of Augmented Reality Lenses, Spotlight and the My AI chatbot. Snap’s global community reached 474 million DAUs in the fourth quarter of 2025, up 5% year over year.
Pinterest is benefiting from solid user engagement across all regions. In the fourth quarter of 2025, Pinterest witnessed 12% year-over-year growth in global monthly active users to 619 million.
RDDT’s Share Price Performance, Valuation, and Estimates
RDDT shares have plunged 40.8% in the year-to-date period, underperforming the broader Zacks Computer & Technology sector and the Internet - Software industry’s decline of 6.1% and 18.2%, respectively.
RDDT Stock Performance
Image Source: Zacks Investment Research
RDDT shares are overvalued, with a forward 12-month Price/Sales of 7.58X compared with the Computer & Technology sector’s 5.81X. RDDT has a Value Score of D.
RDDT Valuation
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for 2026 earnings is pegged at $4.02 per share, which remained unchanged over the past 30 days. This suggests 53.44% year-over-year growth.
Reddit Inc. Price and Consensus
Reddit Inc. price-consensus-chart | Reddit Inc. Quote
RDDT currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.