From Yahoo Finance: 2025-05-31 13:38:00

Reddit Inc. (RDDT) stock has seen a wild ride from $34 to $230 before settling at $103 today since its IPO last March. Despite doubts, its unique platform and impressive growth in both top and bottom lines make it a solid investment opportunity with potential for a big rebound.

Reddit’s vibrant community has seen a 31% increase in daily active users to 108.1 million in Q1, with 401 million weekly users exploring various subreddits. The platform’s “Reddit Answers” feature, now at 1 million weekly users, boosts engagement and keeps users hooked longer, ensuring sustainable growth.

The network effect created by Reddit’s hyper-specific interests draws in more users, enriching content and attracting advertisers. Q1 ad revenue surged 61% to $359 million, showing strong ROI for advertisers. The ads seamlessly integrated into user discussions contribute to Reddit’s appeal as an advertising platform.

Reddit’s data is increasingly valuable, with revenue from data licensing up 66% to $34 million in the last quarter. Partnerships, like with Google, have enhanced the platform’s visibility in search results, showcasing Reddit’s potential for further growth and monetization of its comprehensive dataset.

Despite a decline in stock price, Reddit’s revenue is projected to grow by 42% this year, leading to its first profitable year and an 83% increase in EPS for fiscal year 2026. Wall Street is optimistic about Reddit, with a Moderate Buy consensus rating and an average stock price target indicating a 37% upside potential in the next twelve months.

Reddit’s evolution into a publicly traded company with a $19 billion market cap is impressive, with the recent pullback viewed as temporary. Strong user growth, robust advertising business, and valuable data licensing segment position Reddit for long-term success. The current dip presents a compelling entry point for potential growth in the future.

Read more: Reddit’s (RDDT) Rollercoaster Ride Enters Buy-the-Dip Territory