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For the first quarter of 2026, RDDT expects revenues between $595 million and $605 million, representing 52% to 54% year-over-year revenue growth with a midpoint of about 53%. For the first quarter of 2026, the Zacks Consensus Estimate for revenues is pegged at $614.09 million, indicating year-over-year growth of 56.51%.
The consensus mark for earnings is pegged at 62 cents per share, unchanged over the past 30 days. This indicates year-over-year growth of 166.67%.
RDDT’s earnings surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average surprise being 188.78%.
Let’s see how things have shaped up for this announcement.
Factors Likely to Have Influenced Q1 Performance
Reddit’s first-quarter performance is expected to have benefited from increased ad sales and the company’s growing AI initiatives. The company’s advertising business is expected to have benefited from continued innovation in ad products and solutions in the to-be-reported quarter.
The company has integrated AI-powered features, such as Reddit Answers, into its platform to enhance user experience and engagement. 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 Answers, the AI-powered search feature, saw growth in queries, increasing from 1 million to 15 million over the year. This is expected to have further contributed to ad revenues in the first quarter of 2026.
However, a challenging macroeconomic environment, including elevated tariffs, may reduce discretionary ad spending. Intense competition, along with advertiser concentration risks, poses challenges to RDDT’s near-term prospects.
RDDT Shares Underperform Sector
RDDT shares have plunged 30.3% in the year-to-date period, underperforming the Zacks Computer & Technology sector’s return of 8.5%.
The company’s shares have also underperformed its peers, which include Snap (SNAP - Free Report) , Pinterest (PINS - Free Report) , and Alphabet (GOOGL - Free Report) , which are also expanding their footprints in the digital advertising space. While Snap and Pinterest shares have lost 24.9% and 21.5%, respectively, Alphabet’s shares have gained 11.9% in the year-to-date period.
RDDT Stock's Performance
Image Source: Zacks Investment Research
RDDT stock is not so cheap, as the Value Score of D suggests a stretched valuation at this moment, which makes it a risky bet for risk-averse investors.
In terms of the forward 12-month Price/Sales, Reddit is trading at 8.77X, higher than the Internet - Software industry’s 3.98X.
RDDT's Valuation
Image Source: Zacks Investment Research
RDDT Benefits From Expanding Portfolio
Reddit’s expanding portfolio is helping the company fend off its competitors from companies like Snap, Pinterest and Alphabet. Its strong focus on enhancing user-friendly features and expanding advertiser tools such as DPA, Reddit Pixel and CAPI is driving significant growth in user engagement and ad revenues. In the fourth quarter of 2025, Advertising revenues surged 75% year over year to $690 million.
The introduction of new ad formats, like DPA and Reddit Max campaigns, has further bolstered advertiser adoption and improved return on ad spend (ROAS). The introduction of DPA has been particularly impactful, with strong performance during key shopping periods like Black Friday and Cyber Monday. Improvements to DPA’s machine learning models have led to a 75% increase in advertiser ROAS in the fourth quarter of 2025. This development makes Reddit a strong competitor in the shopping ads market.
RDDT is also seeing significant growth in its advertiser base, with total active advertiser count increasing more than 75% year over year in the fourth quarter of 2025. This includes large brands, mid-market companies and small-to-medium businesses (SMBs), with SMB revenues doubling year over year.
Reddit Benefits From International Expansion
Reddit is expected to benefit from its focus on international expansion, which has emerged as a major growth driver for the company. In 2025, the company reported 76% year-over-year growth in international revenue, reaching $417 million. This growth rate outpaced its U.S. revenue increase of 68%, highlighting the immense potential of global markets in driving Reddit’s overall revenue growth.
The platform’s international daily active unique users (DAUq) grew 28% year over year to 68.9 million, while logged-out DAUq surged 40%. These metrics demonstrate Reddit’s ability to attract and engage users outside the United States, which is critical for its advertising revenue. In 2025, Reddit’s ad revenue increased 74% year over year to $2.1 billion, showcasing the platform’s success in monetizing its growing user base.
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.
View the Zacks #1 Rank List
Image: Bigstock
Should You Buy, Sell, or Hold Reddit Stock Before Q1 Earnings Release?
Key Takeaways
Reddit (RDDT - Free Report) is set to release its first-quarter 2026 results on April 30, 2026.
For the first quarter of 2026, RDDT expects revenues between $595 million and $605 million, representing 52% to 54% year-over-year revenue growth with a midpoint of about 53%. For the first quarter of 2026, the Zacks Consensus Estimate for revenues is pegged at $614.09 million, indicating year-over-year growth of 56.51%.
The consensus mark for earnings is pegged at 62 cents per share, unchanged over the past 30 days. This indicates year-over-year growth of 166.67%.
RDDT’s earnings surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average surprise being 188.78%.
Reddit Inc. Price and EPS Surprise
Reddit Inc. price-eps-surprise | Reddit Inc. Quote
Let’s see how things have shaped up for this announcement.
Factors Likely to Have Influenced Q1 Performance
Reddit’s first-quarter performance is expected to have benefited from increased ad sales and the company’s growing AI initiatives. The company’s advertising business is expected to have benefited from continued innovation in ad products and solutions in the to-be-reported quarter.
The company has integrated AI-powered features, such as Reddit Answers, into its platform to enhance user experience and engagement. 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 Answers, the AI-powered search feature, saw growth in queries, increasing from 1 million to 15 million over the year. This is expected to have further contributed to ad revenues in the first quarter of 2026.
However, a challenging macroeconomic environment, including elevated tariffs, may reduce discretionary ad spending. Intense competition, along with advertiser concentration risks, poses challenges to RDDT’s near-term prospects.
RDDT Shares Underperform Sector
RDDT shares have plunged 30.3% in the year-to-date period, underperforming the Zacks Computer & Technology sector’s return of 8.5%.
The company’s shares have also underperformed its peers, which include Snap (SNAP - Free Report) , Pinterest (PINS - Free Report) , and Alphabet (GOOGL - Free Report) , which are also expanding their footprints in the digital advertising space. While Snap and Pinterest shares have lost 24.9% and 21.5%, respectively, Alphabet’s shares have gained 11.9% in the year-to-date period.
RDDT Stock's Performance
Image Source: Zacks Investment Research
RDDT stock is not so cheap, as the Value Score of D suggests a stretched valuation at this moment, which makes it a risky bet for risk-averse investors.
In terms of the forward 12-month Price/Sales, Reddit is trading at 8.77X, higher than the Internet - Software industry’s 3.98X.
RDDT's Valuation
Image Source: Zacks Investment Research
RDDT Benefits From Expanding Portfolio
Reddit’s expanding portfolio is helping the company fend off its competitors from companies like Snap, Pinterest and Alphabet. Its strong focus on enhancing user-friendly features and expanding advertiser tools such as DPA, Reddit Pixel and CAPI is driving significant growth in user engagement and ad revenues. In the fourth quarter of 2025, Advertising revenues surged 75% year over year to $690 million.
The introduction of new ad formats, like DPA and Reddit Max campaigns, has further bolstered advertiser adoption and improved return on ad spend (ROAS). The introduction of DPA has been particularly impactful, with strong performance during key shopping periods like Black Friday and Cyber Monday. Improvements to DPA’s machine learning models have led to a 75% increase in advertiser ROAS in the fourth quarter of 2025. This development makes Reddit a strong competitor in the shopping ads market.
RDDT is also seeing significant growth in its advertiser base, with total active advertiser count increasing more than 75% year over year in the fourth quarter of 2025. This includes large brands, mid-market companies and small-to-medium businesses (SMBs), with SMB revenues doubling year over year.
Reddit Benefits From International Expansion
Reddit is expected to benefit from its focus on international expansion, which has emerged as a major growth driver for the company. In 2025, the company reported 76% year-over-year growth in international revenue, reaching $417 million. This growth rate outpaced its U.S. revenue increase of 68%, highlighting the immense potential of global markets in driving Reddit’s overall revenue growth.
The platform’s international daily active unique users (DAUq) grew 28% year over year to 68.9 million, while logged-out DAUq surged 40%. These metrics demonstrate Reddit’s ability to attract and engage users outside the United States, which is critical for its advertising revenue. In 2025, Reddit’s ad revenue increased 74% year over year to $2.1 billion, showcasing the platform’s success in monetizing its growing user base.
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.
Reddit stock currently carries a Zacks Rank #2 (Buy), which implies that investors should start accumulating the stock right now. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.