Reddit Surges 50% in a Month: Is the Stock Still Worth Buying?

Reddit RDDT shares have surged 49.6% in the past month, driven by strong second-quarter 2025 results and solid third-quarter guidance. The shares have outperformed the broader Zacks Computer & Technology sector’s 2% appreciation and the Zacks Internet - Software industry’s 1% increase during the same period.

Reddit reported second-quarter 2025 earnings of 45 cents per share, which beat the Zacks Consensus Estimate by 25 cents. Earnings improved significantly as the company had incurred a loss of 6 cents per share in the year-ago quarter. Revenues of $499.63 million surpassed the Zacks Consensus Estimate by 16.9% and surged 77.9% year over year, reflecting solid advertiser demand and expanding engagement.

For the third quarter of 2025, Reddit expects revenues between $535 million and $545 million, suggesting growth in the range of 54-56% year over year. The Zacks Consensus Estimate for third-quarter revenues is pegged at $549.59 million. The consensus mark for third-quarter 2025 earnings is pegged at 49 cents per share, which has increased 17 cents over the past 30 days. The figure indicates a significant improvement from the year-ago EPS of 16 cents per share.

Reddit Price & Consensus

Reddit Inc. price-consensus-chart | Reddit Inc. Quote

Reddit shares have jumped 33.5% year to date (YTD), outperforming the broader Zacks Computer & Technology sector’s return of 11.8%. The company has outperformed peers, including Meta Platforms META, Alphabet GOOGL and Snap SNAP YTD. Shares of Meta Platforms and Alphabet have returned 27.4% and 5.3%, respectively, while Snap has declined 33.5%.

RDDT Stock’s YTD Performance

The stock is currently trading above the 50-day and the 200-day moving averages, indicating a bullish trend.

RDDT Stock Trades Above the 50-Day & 200-Day SMAs

So, is RDDT stock still a buy right now? Let’s analyze.

Reddit’s Expanding Portfolio Drives Momentum

Reddit's advertising platform has broadened significantly beyond basic community-based ads into a full suite of performance marketing solutions spanning multiple advertiser objectives. Key offerings such as Shopping Ads and Dynamic Product Ads are expanding the platform’s portfolio and delivering nearly 2 times higher return on ad spend than traditional conversion campaigns in the second quarter. This expansion is drawing more sophisticated marketers and strengthening adoption across commerce-driven categories.

Advertising revenues surged 84% year over year to $465 million in the second quarter of 2025, highlighting traction in direct-response formats and commerce-focused demand. The Zacks Consensus Estimate for third-quarter advertising revenues is pegged at $438.3 million. Continued rollout of new formats, coupled with integrations with partners like Smartly.io, is expected to expand Reddit’s product portfolio further and reinforce momentum among performance-oriented advertisers.

Authentic Content Drives AI-Powered Global Expansion

Reddit’s repository of authentic human conversations across more than 100,000 active subreddits continues to differentiate it in the AI-driven digital landscape. The 20-year archive has positioned Reddit as the most cited domain for AI training, creating a durable foundation for data licensing, which is expected to remain a growing contributor beyond advertising.

AI-powered features are scaling adoption without disrupting community integrity. During the recently reported quarter, Reddit Answers reached 6 million weekly users with 5 times quarterly growth, highlighting how AI enhances discovery and personalization. Machine translation has already unlocked expansion into 23 languages. In the second quarter, international Daily Active Uniques (DAUq) advanced 32% year over year compared with 11% in the United States, suggesting the platform’s global adoption. These momentum trends are expected to sustain broadening engagement, with the consensus mark for third-quarter DAUq’s being pegged at 113.17 million.

Focus markets, such as France, Spain and Brazil, contributed more than half of international growth in the latest quarter and are expected to remain critical drivers. The Zacks Consensus Estimate for other revenues, which includes data licensing, is pegged at $34.6 million for the third quarter, reflecting expectations of continued traction as Reddit leverages its unique content advantage to scale globally.

Valuation: Reddit Stock Trades at a Premium

Reddit shares are trading at a premium, as suggested by a Value Score of F.

In terms of forward 12-month P/S, RDDT stock is trading at 16.5X compared with the Zacks Internet - Software industry’s 5.58X. Shares of Meta Platforms, Alphabet and Snap are trading at a P/S of 8.75X, 6.69X and 1.92X, respectively.

RDDT’s P/S Ratio (F12M)

Conclusion

Reddit’s accelerating advertising momentum, rising contribution from data licensing and expanding global user base provide clear growth visibility. The platform’s ability to scale authentic content through AI-driven features while deepening engagement across international markets positions it for sustained revenue expansion. These factors collectively justify a premium valuation.

Reddit currently sports a Zacks Rank #1 (Strong Buy) and a Growth Score of B, a favourable 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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This article originally published on Zacks Investment Research (zacks.com).

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