Core Insights - Reddit (RDDT) is expected to report second-quarter 2025 revenues between $410 million and $430 million, reflecting a year-over-year growth of 46% to 53% with a midpoint of 50% [1] - The Zacks Consensus Estimate for second-quarter revenues stands at $426.49 million, indicating a year-over-year increase of 51.68%, with earnings estimated at 19 cents per share [1] Performance Overview - Reddit has surpassed the Zacks Consensus Estimate in the last four quarters, with an average surprise of 250.81% [2] - The second-quarter performance is anticipated to show progress in advertising, product development, and international expansion, following a first-quarter revenue growth of 61% [3] Advertising and Monetization - Performance advertising is likely to remain a focus, with increased use of conversion APIs and machine learning tools contributing to better outcomes [4] - AI-based initiatives, such as Reddit Answers and campaign automation tools, may enhance user and advertiser workflows, while international markets are expected to contribute to revenue growth [5] Partnerships and AI Initiatives - Reddit's partnerships, including one with Alphabet (GOOGL), support growth in AI, advertising, and data licensing, providing recurring revenue and deeper product integration [7] - The introduction of Reddit Answers, an AI-powered search tool, and partnerships with Microsoft (MSFT) and Intercontinental Exchange are expected to enhance content reach and analytics capabilities [8][9][10] Valuation and Market Performance - RDDT is trading at a forward P/S ratio of 13.02X, significantly above the industry average of 5.82X, indicating a stretched valuation [11] - Year-to-date, RDDT shares have declined by 7.2%, underperforming the broader technology sector and the internet-software industry [14]
Reddit Stock Before Q2 Earnings: Hold or Fold the Stock?