Reddit Inc.‘s (NYSE:RDDT) recent stock surge highlights a broader trend of tech companies outperforming expectations this earnings season, driven by robust user engagement and advertising growth. This momentum sets the stage for a detailed analysis of Reddit’s financial performance and the varied reactions from industry analysts.
Shares of Reddit rallied in early trading on Friday, after the company on Thursday reported upbeat second-quarter results.
The announcement came amid an exciting earnings season. Here are some key analyst takeaways.
JPMorgan On Reddit
Analyst Doug Anmuth reiterated a Neutral rating, while raising the price target from $145 to $190.
After softness in April, Reddit users gained traction through the quarter, Anmuth said in a note. The company finished the second quarter with more than 110 million daily active unique users (DAUq), he added.
The platform added DAUs across both the U.S. and international in July, the analyst stated. "We believe 50% L-T Adj. EBITDA margins may be achievable over time, and we project RDDT reaching GAAP OI & NI profit for full-year 2025," he further wrote.
Guggenheim Securities On Reddit
Analyst Michael Morris maintained a Buy rating, while raising the price target from $165 to $215.
Reddit's Q2 revenue growth accelerated to 78%, taking the topline 16% above the high-end of the guidance range, Morris said. Most of this growth was driven by increased penetration of existing client accounts, he added.
The number of total active advertisers grew by 50% in the second quarter, the analyst stated. Management's third-quarter revenue guidance came in around 20% above consensus estimates at the midpoint, "reflecting continuation of ad demand trends and further investment in high-return sales headcount," he further wrote.
Check out other analyst stock ratings.
Goldman Sachs On Reddit
Analyst Eric Sheridan reiterated a Neutral rating, while lifting the price target from $152 to $212.
Reddit reported the second consecutive quarter of strong revenue growth, Sheridan said. Both second-quarter results and third-quarter guidance came "solidly above expectations," he added.
Despite an increase in marketing spend, Reddit demonstrates strong operating leverage with around 58% incremental adjusted EBITDA margins, the analyst stated. Management's commentary remained positive around key initiatives "such as AI, lower-funnel ad performance and revenue growth diversification," he further wrote.
Needham On Reddit
Analyst Laura Martin maintained a Buy rating, while raising the price target from $165 to $215.
Reddit reported revenues of $499.6 million, up 78% year-on-year, while ad revenues grew 84% to $465 million, Martin said. Gross profit came in at $453.7 million, up 80% year-on-year, with gross margins of 90.8%, she added.
The company's average revenue per user (ARPU) was $4.53, up 47% year-on-year, the analyst stated. Reddit's upcoming UX update "should improve retention and monetization," she further wrote.
BofA Securities on Reddit
Analyst Justin Post reaffirmed a Neutral rating, while taking the price target higher, from $150 to $180.
Reddit reported revenue and EBITDA of $500 million and $167 million, respectively, beating consensus of $425 million and $128 million, Post said. The third-quarter revenue guidance of $535 million-$545 million, reflects topline growth of 54%-56% year-on-year, he added.
Management guided to EBITDA of $185-$195 million, above Street expectations of $157 million, the analyst stated. "At the high end, 3Q guide suggests 21pts q/q deceleration on 14pts tougher y/y comp & is likely conservative if new tariff impact on discretionary spend is limited," he further wrote.
RDDT Price Action: Reddit shares were up 17.54% at $188.75 at the time of publication on Friday, according to Benzinga Pro data.
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