Reddit Retail Traders Gush Over Q1 Beat, Positive Outlook: Stock Rallies

Reddit, Inc. (RDDT) stock rallied in Thursday's after-hours session in reaction to the community-based social media network's better-than-expected quarterly results and strong guidance.

San Francisco, California-based Reddit reported earnings per share (EPS) of $0.13 and revenue of $392.4 million for the first quarter of the fiscal year 2025. 

The EPS reversed from a loss of $8.19 in the year-ago quarter and beat the consensus estimate of $0.01.

Revenue climbed 61% year over year (YoY), slower than the previous quarter's 71% growth, but exceeded the consensus estimate of $369.58 million and the guidance of $360 million to $370 million.

U.S. revenue rose 57% and accounted for 80% of the total, while international revenue rose at a faster 82% clip.

The adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) jumped to $115 million from $10 million last year, with the EBITDA margin surging to 29.4% from 4.1%. The guidance was for $80 million to $90 million adjusted EBITDA.

Steve Huffman, Co-Founder and CEO of Reddit said, "Over 400 million people now come to Reddit each week—because when you want real opinions, you turn to real people."

Among key operational metrics, daily active unique users (DAUq) climbed 31% yearly to 108.1 million, slower than the fourth quarter's 39% growth.

Meanwhile, the average revenue per user (ARPU) rose at steady pace of 23% to $3.63.

Looking ahead, Reddit guided second-quarter revenue of $410 million to $430 million, ahead of the $390.74-million consensus estimate, and adjusted EBITDA of $110 million to $130 million.

On the earnings call, Huffman said the company expects some bumps due to the Google algorithm changes, according to a Koyfin transcript. "Given that the search ecosystem is under heavy construction, the near term could be more bumpy than usual," he added.

COO Jennifer Wong said it has been business as usual at Reddit so far despite the macro uncertainties. She said, "Reddit is an important partner to brands and businesses who are trying to understand how their consumers might be changing their behavior. So I think we're well positioned for moments like this."

On Stocktwits, retail sentiment toward Reddit stock was 'extremely bullish' (94/100) by late Thursday, with the message volume at 'extremely high' levels.

A bullish user said Reddit is a buy, given its proprietary content is essential for training large language models (LLM). "Huge beat and raise," they said.

Another user called the report "stellar" and said they would continue to buy the dips. "This is a long-term hold for sure! There are so many exit opportunities, such as continued natural growth or acquisition by one of the tech joints like Google or Meta," they said.

Reddit stock ended Thursday's session up 1.90% at $118.79 and gained 6.49% in after-hours trading. The stock has lost 27% since the start of 2025 and has pulled back a steeper 48% from the Feb. 10 all-time high of $230.41.

The Koyfin-compiled consensus analysts' price target for the stock is $145.59.

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