Reddit Reports Strong Earnings but Stock Volatility Persists
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Feb 06 2026
0mins
Should l Buy RDDT?
Source: Benzinga
- Earnings Beat: Reddit reported an adjusted EPS of $1.24, significantly exceeding the analyst consensus of $0.94, indicating strong profitability that may attract more investor interest.
- Revenue Surge: The company achieved revenue of $726 million, a 70% year-over-year increase, with advertising revenue rising by 75%, demonstrating Reddit's growing competitiveness in the advertising market and potential for further market share expansion.
- Strong User Growth: Daily Active Uniques (DAUq) rose by 19% to 121.4 million, with international growth (up 28%) outpacing the U.S., showcasing Reddit's appeal and potential for expansion on a global scale.
- Concerns Over Slowing Growth: Despite strong earnings, growth in U.S. logged-in users slowed to 5%, raising market concerns about saturation in Reddit's most profitable market, while the CEO's announcement to stop reporting the split between logged-in and logged-out users may mask deceleration in high-value user growth.
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Analyst Views on RDDT
Wall Street analysts forecast RDDT stock price to rise
22 Analyst Rating
14 Buy
8 Hold
0 Sell
Moderate Buy
Current: 131.070
Low
207.00
Averages
260.00
High
325.00
Current: 131.070
Low
207.00
Averages
260.00
High
325.00
About RDDT
Reddit, Inc. operates a social platform, Reddit. Reddit is a community of communities. It is built on shared interests, passion, and trust and is home to open and authentic conversations on the Internet. Reddit is a global, digital city where anyone in the world can join a community to learn from one another, engage in authentic conversations, explore passions, research new hobbies, exchange goods and services, create new communities and experiences, share a few laughs, and find belonging. Reddit has thousands of communities, endless conversations, and authentic human connections. Communities on Reddit are organized based on specific interests and are called subreddits. Reddit offers real-time access to evolving and dynamic topics, such as sports, movies, news, fashion, and the latest trends. On Reddit, users can submit, vote, and comment on the topics they care about. It has approximately 100,000+ active communities and approximately 101+ million daily active visitors.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- Robust Digital Advertising: The 75% increase in digital advertising revenue in Q4 indicates Reddit's enhanced competitiveness in the advertising market, reflecting its strategic shift towards becoming a data engine.
- Executive Stock Purchase: Director Sarah Farrell purchased 50,500 shares of Reddit stock for approximately $7.48 million between February 10 and 11, demonstrating confidence in the company's future value despite prevailing negative market sentiment.
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- Market Bounce: RDDT recently closed near $131 and bounced more than 4% in premarket trading, suggesting that the market's reaction to the stock's decline may have been overdone, reflecting an improvement in investor sentiment.
- Technical Analysis: RDDT is currently trading well below its 50-day, 100-day, and 200-day moving averages, indicating a clear downtrend; however, the relative strength index (RSI) is near 26, firmly in oversold territory, which often signals the beginning of reflex rallies.
- Psychological Shift: Following a brutal 46% drawdown, the insider buying behavior may change market psychology, suggesting that smart money sees value where the market perceives risk, although a breakout above the $142 resistance level is needed to confirm a rebound in the short term.
See More
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- Expanded Regulatory Powers: UK Prime Minister Keir Starmer announced that the government will seek broader authority to regulate internet access, allowing for policy reviews within months instead of years, thereby accelerating the response to emerging digital risks.
- Social Media Ban Review: The government is considering a ban on social media access for children under 16, similar to Australia's policy, with Spain, Greece, and Slovenia also evaluating similar proposals, highlighting a global focus on online safety for children.
- AI and Age Verification: The UK government plans to widen laws banning the creation of sexualized images without consent to include more AI chatbots, reflecting concerns over ethical and legal challenges posed by new technologies in the digital landscape.
- International Cooperation and Security: U.S. Secretary of State Marco Rubio reaffirmed America's commitment to the transatlantic alliance at the Munich Security Conference, warning that Europe must take greater responsibility for its security, underscoring the urgency of international cooperation in security matters.
See More
Reddit's Strong 2025 Earnings Amid Cautious Market Sentiment
- Significant Profit Growth: Reddit reported Q4 2025 earnings of $726 million, a 70% year-over-year increase, with full-year revenue reaching $2.2 billion, showcasing strong profitability despite cautious market sentiment.
- Robust Digital Advertising: The 75% increase in digital advertising revenue in Q4 indicates Reddit's enhanced competitiveness in the advertising market, reflecting its strategic shift towards becoming a data engine.
- Executive Stock Purchase: Director Sarah Farrell purchased 50,500 shares of Reddit stock for approximately $7.48 million between February 10 and 11, demonstrating confidence in the company's future value despite prevailing negative market sentiment.
- User Growth vs. Monetization Challenges: Reddit's daily active unique users increased from 19% to 121 million, yet investors remain concerned about the disparity between “logged-out” user growth and the monetization of “logged-in” users, highlighting caution regarding the company's long-term profitability prospects.
See More
Reddit Named Among Top Meme Stocks to Buy Now
- Strong User Growth: Reddit's Q4 2025 results indicate solid growth in users, advertising revenue, and EBITDA, with Goldman Sachs cutting its price target from $236 to $206 while maintaining a Neutral rating, reflecting cautious optimism about its future performance.
- Financial Performance Exceeds Expectations: The company reported Q4 revenue of $726 million, a 70% increase year-over-year, with diluted earnings per share at $1.24, beating estimates by 28 cents, showcasing its robust profitability in the social media sector.
- Optimistic Future Outlook: Reddit forecasts Q1 2026 revenue between $595 million and $605 million, exceeding analysts' expectations of $577.2 million, indicating that its AI-enhanced advertising platform is attracting more marketers, further driving revenue growth.
- Investment Potential Analysis: Despite the price target cut, the revised target still represents an 81% upside from the current closing price of $131.07, indicating a positive market sentiment towards Reddit's mid-term investment potential, especially in light of long-term trends in digital advertising and artificial intelligence.
See More
Reddit Shares Surge After Director's $7.48M Purchase
- Director's Share Purchase: Reddit director Sarah Farrell purchased 50,500 shares for $7.48M between February 10 and 11, with prices ranging from $139.27 to $149.79, reflecting confidence in the company's future and driving a 6% share price increase.
- Increased Holdings: Following this transaction, Farrell's total holdings rose to 58,399 shares, indicating her commitment to the company's long-term growth, which may enhance market trust in Reddit.
- CFO's Share Divestment: In the same week, Reddit CFO Christopher Slowe divested 11,464 shares for $1.72M under a Rule 10b5-1 trading plan, raising concerns about insider trading despite the regulatory safeguards in place.
- Market Reaction: The contrast between Farrell's purchase and Slowe's sale has led to a positive market response, potentially increasing investor interest and confidence in Reddit in the short term.
See More
Pinterest Price Target Cut to $25 Amid Deteriorating Fundamentals
- Price Target Reduction: Evercore ISI has cut Pinterest's price target from $40 to $25 and downgraded its rating from 'Outperform' to 'In Line', indicating a clear deterioration in the company's fundamentals as revenue growth continues to slow.
- Revenue Growth Deceleration: Pinterest's revenue growth rate fell from 17% in Q2 to 16% in Q3, and further down to 13% in Q4, highlighting the severe challenges the company faces in an increasingly competitive market.
- Market Reaction: Following the Q4 revenue miss against Wall Street expectations, Pinterest's stock dropped over 21% in pre-market trading on Friday, and has declined nearly 33% over the past month, reflecting a significant loss of investor confidence.
- Increased Competitive Pressure: Analysts noted rising competitive intensity from AI-driven rivals like Google and Meta, compounded by the impact of tariffs from the Trump administration on major retailers' advertising budgets, which has further exacerbated Pinterest's market challenges.
See More
Director's Significant Share Purchase Signals Potential Rebound
- Insider Buying: Director Sarah Farrell purchased 50,500 shares at around $148 over two days, boosting her ownership by over 600%, indicating strong confidence in the company's future and potentially influencing market perception of RDDT.
- Market Bounce: RDDT recently closed near $131 and bounced more than 4% in premarket trading, suggesting that the market's reaction to the stock's decline may have been overdone, reflecting an improvement in investor sentiment.
- Technical Analysis: RDDT is currently trading well below its 50-day, 100-day, and 200-day moving averages, indicating a clear downtrend; however, the relative strength index (RSI) is near 26, firmly in oversold territory, which often signals the beginning of reflex rallies.
- Psychological Shift: Following a brutal 46% drawdown, the insider buying behavior may change market psychology, suggesting that smart money sees value where the market perceives risk, although a breakout above the $142 resistance level is needed to confirm a rebound in the short term.
See More
