Popular social media platform Reddit (RDDT) is set to report its third-quarter results for fiscal 2026 on Oct. 29, after the market closes. Ahead of the results, the stock has been under pressure as investors question the sustainability of its growth. Investors have raised concerns because Google Search’s AI-generated answers are feared to reduce website traffic.
For the third quarter, Reddit expects revenue between $860 million and $870 million. However, the user mix has not been that special, as logged-out users are growing faster than logged-in users. Starting with the third-quarter results, the company will no longer report logged-in and logged-out daily active users separately, which might raise the question of a lack of visibility into its metrics.
Ahead of the earnings, let's take a closer look at Reddit.
About Reddit Stock
Reddit is a website where people share posts, links, pictures, and videos. Users join communities called subreddits, which focus on topics like sports, games, news, movies, or hobbies. Other users vote posts and comments up or down, helping decide which content appears first. Each subreddit has moderators who set rules and remove posts that break them.
Reddit’s employees run the website, improve its technology, manage safety policies, and earn money through advertising and data licensing. The platform connects people with similar interests and lets them discuss almost any topic. It is headquartered in San Francisco, California, and has a market capitalization of $26.25 billion.
RDDT stock is down 38% over the past 52 weeks and 11% over the past six months. The company is still growing quickly and profitably, but the market is pricing in risks around Google-driven traffic and slowing growth. The stock reached a 52-week low of $119.27 on March 30 but is up 10% from that level.
On a forward-adjusted basis, Reddit’s price-to-earnings (P/E) ratio of 25.29x is higher than the industry average of 14.21x.
Strong Second-Quarter Results
With ad revenue up 64% year-over-year (YoY) to $762 million (driven by higher pricing and impressions), Reddit’s second-quarter revenue climbed 61% YoY to $805 million. The company crossed $1 million in revenue per employee. This also marked the eighth consecutive quarter of more than 60% YoY growth. The results also indicated that Reddit’s international segment is growing faster than the U.S. segment.
The growth was supported by Reddit’s growing user base. Daily Active Uniques (DAUq) averaged 130.3 million, up 18% YoY. However, logged-in users grew 7%, and logged-out users grew 27%.
The company’s gross margin increased from 90.8% to 91.3% YoY. More importantly, its net margin jumped from 17.9% to 31.4% over the same period. Reddit’s EPS climbed 178% to $1.25. Its free cash flow rose 135% to $261 million, giving it more to reinvest in the business.
Wall Street analysts are strongly optimistic about Reddit’s future earnings trajectory. They expect the company’s EPS to climb 62.5% YoY to $1.30 for the about-to-be-reported third quarter. For fiscal 2026, EPS is projected to surge 101.2% to $5.27, followed by a 31.9% growth to $6.95 in fiscal 2027. Reddit has also topped EPS estimates in each of the trailing four quarters.
What Do Analysts Think About RDDT Stock?
This month, analysts at Needham reiterated a bullish “Buy” rating on Reddit’s stock and a $300 price target. Reddit’s Q3 2026 traffic data showed stronger momentum than Q2, with app downloads up 19% quarter-over-quarter and both app and web traffic accelerating. U.S. user growth peaked in June and carried into Q3, while international users have trended upward since April and continued strengthening into Q3. In September, DA Davidson analysts maintained a “Buy” rating but lowered the price target from $200 to $185.
RDDT stock has become a popular name on Wall Street in a short time, with analysts awarding it a consensus “Moderate Buy” rating. Of the 32 analysts rating the stock, 20 analysts have rated it a “Strong Buy,” one analyst rated it a “Moderate Buy,” 10 analysts gave a “Hold” rating, and only one analyst rated it as a “Strong Sell.” The consensus price target of $210.64 represents a 60% upside from current levels. Moreover, the Street-high price target of $300 indicates a 130 upside.
On the date of publication, Anushka Dutta did not directly have a position in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.