Core Insights - Reddit has shown remarkable performance in 2025, with shares surging and achieving profitability for the first time, posting $163 million in net income in Q3 2025 after a loss of $484 million in 2024 [2][5] - Analysts are optimistic about Reddit's growth, with a consensus price target of $242, indicating a modest 2% upside from current levels around $238, driven by strong revenue growth and user engagement [3][4] Financial Performance - Q3 2025 revenue reached $585 million, reflecting a 68% year-over-year growth, surpassing the consensus estimate of $549 million [3][5] - Earnings per share for Q3 were $0.80, exceeding expectations of $0.52, and advertising revenue increased by 74% year-over-year to $549 million [3][5] - Free cash flow for the last quarter was $183 million, up 158% year-over-year [4][6] Growth Catalysts - Continued earnings beats are expected, with Q4 revenue guidance set between $655 million and $665 million, indicating sustained momentum [6] - Speculation around S&P 500 inclusion could lead to significant passive inflows, enhancing stock demand [6] - Daily active users grew by 19% year-over-year, which is anticipated to drive higher advertising revenue [6] - Reddit's gross margins expanded to 91%, providing room for leveraging platform economics as the company scales [6] Market Context - If the Nasdaq maintains its 2025 performance into 2026, high-growth stocks like Reddit are likely to benefit from a risk-on sentiment in the market [7]
Here’s How Reddit Gets to $300 Per Share in 2026