Reddit (RDDT) Is Down 6.9% After Surprising Q3 Profit Surge and User-Driven Revenue Gains

• Reddit, Inc. recently reported strong third quarter 2025 results, with revenue rising to US$584.91 million and net income reaching US$162.66 million, both significantly higher than the same period last year.
• An interesting highlight from the report is Reddit’s substantial turnaround, shifting from a net loss in the prior year’s nine-month period to substantial year-to-date profits in 2025, driven by user growth and new data licensing deals.
• We’ll examine how Reddit’s robust earnings growth and confident outlook may reshape its long-term revenue expansion and profitability narrative.

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Reddit Investment Narrative Recap

Investors considering Reddit today need to believe in the company’s ability to convert robust user and revenue growth into sustained profitability, while successfully diversifying beyond its heavy reliance on digital advertising. The latest earnings report reinforced confidence in Reddit’s execution, but the company’s exposure to shifts in online ad spending remains the most important short-term catalyst, and also its biggest present risk. This quarter’s solid results do not materially alter that risk profile in the near term.

Among Reddit’s recent announcements, its raised fourth-quarter earnings guidance stands out, projecting revenue between US$655 million and US$665 million. This aligns closely with investor focus on near-term revenue momentum and supports optimism around user and advertising growth as principal drivers of performance heading into year-end.

By contrast, it’s critical for prospective shareholders to understand how ongoing changes in online advertising effectiveness may impact Reddit's...

Read the full narrative on Reddit (it's free!)

Reddit's outlook forecasts $3.8 billion in revenue and $1.0 billion in earnings by 2028. This implies a 31.8% annual revenue growth rate and an $783.7 million earnings increase from current earnings of $216.3 million.

Uncover how Reddit's forecasts yield a $228.50 fair value, a 17% upside to its current price.

Exploring Other Perspectives

Twenty-three fair value estimates from the Simply Wall St Community range from US$97.30 to US$306.91 per share, illustrating widely different views on Reddit’s worth. Opinions differ, especially as recent earnings highlight how quickly growth can reshape risk and reward for this platform-heavy business.

Explore 23 other fair value estimates on Reddit - why the stock might be worth 50% less than the current price!

Build Your Own Reddit Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your Reddit research is our analysis highlighting 3 key rewards that could impact your investment decision.
• Our free Reddit research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate Reddit's overall financial health at a glance.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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