Core Insights - Reddit (RDDT) shares have surged 96.7% over the past six months, significantly outperforming the broader Zacks Computer & Technology sector, which rose 27.4% [1]. Group 1: Performance Comparison - Reddit's shares have outperformed peers such as Pinterest (PINS), Meta Platforms (META), and Snap (SNAP), with Pinterest shares dropping 18.8% and both Meta and Snap losing 6.6% in the same period [2]. Group 2: User Engagement and Revenue Growth - The company's strong performance is attributed to increased user engagement, with daily active users reaching 116 million and weekly active users at 444 million, both up 20% year over year [6]. - Average Revenue Per User (ARPU) increased by 41% year over year to $5.04, indicating effective monetization strategies [3]. - Advertising revenues surged 74% year over year to $549 million, driven by a growing active advertiser count, which expanded by over 75% year over year [11]. Group 3: AI and Advertising Tools - Reddit is leveraging AI-powered tools to enhance user engagement and search functionality, including the introduction of Reddit Answers, which has seen over 75 million weekly searches [7][8]. - The company has introduced new advertising tools such as Reddit Pixel, Conversion API (CAPI), and Dynamic Product Ads (DPA) to support campaign performance and attract more advertisers [10]. Group 4: Future Earnings Estimates - For Q4 2025, Reddit expects revenues between $655 million and $665 million, with a Zacks Consensus Estimate of $668.52 million, reflecting a year-over-year growth of 56.30% [12]. - The consensus estimate for earnings per share for Q4 is 97 cents, indicating a year-over-year growth of 169.44% [13]. - For the full year 2025, the revenue estimate is $2.12 billion, showing a year-over-year growth of 62.78% [13]. Group 5: Valuation and Investment Opportunity - Reddit's stock is currently trading at a premium, with a forward Price/Sales ratio of 14.44, higher than its median of 14.39 and the sector's average of 6.72 [14]. - The company holds a Zacks Rank 1 (Strong Buy) and a Growth Score of A, indicating a strong investment opportunity [17].
Reddit Surges 97% in the Past 6 Months: Is the Stock Worth Buying?