Reddit, Inc. operates a website that organizes digital communities. It organizes communities based on specific interests that enable users to engage in conversations by sharing experiences, submitting links, uploading images and videos, and replying to one another. The company was founded in 2005 and is headquartered in San Francisco, California.

Reddit, Inc.

Сильный индекс, значительно вырос. Быки резко укрепили уверенность в своих позициях.

Strong index, significantly up. Bulls sharply strengthened confidence in their positions.

Слабый индекс, без изменений. Рынок не поддерживает быков.

Weak index, flat. The market does not support the bulls.

Сильный индекс, значительно упал. Отток средств из лонгов на высоком уровне.

Strong index, significantly down. Outflow of funds from longs at a high level.

In the latest look at the underlying components of the S&P 500 ordered by largest market capitalization, Reddit Inc (Symbol: RDDT) has taken over the #388 spot from CF Industries Holdings Inc (Symbol: CF), according to The Online Investor.
Market capitalization is an important data point for investors to keep an eye on, for various reasons. The most basic reason is that it gives a true comparison of the value attributed by the stock market to a given company's stock. Many beginning investors look at one stock trading at $10 and another trading at $20 and mistakenly think the latter company is worth twice as much — that of course is a completely meaningless comparison without knowing how many shares of each company exist. But comparing market capitalization (factoring in those share counts) creates a true "apples-to-apples" comparison of the value of two stocks. In the case of Reddit Inc (Symbol: RDDT), the market cap is now $22.05 billion, versus CF Industries Holdings Inc (Symbol: CF) at $20.76 billion.
Below is a chart of Reddit Inc versus CF Industries Holdings Inc plotting their respective size rank within the S&P 500 over time (RDDT plotted in blue; CF plotted in green):
Below is a three month price history chart comparing the stock performance of RDDT vs. CF:
Another reason market capitalization is important is where it places a company in terms of its size tier in relation to peers — much like the way a mid-size sedan is typically compared to other mid-size sedans (and not SUV's). This can have a direct impact on which mutual funds and ETFs are willing to own the stock. For instance, a mutual fund that is focused solely on Large Cap stocks may for example only be interested in those companies sized $10 billion or larger. Another illustrative example is the S&P MidCap index which essentially takes the S&P 500 index and "tosses out" the biggest 100 companies so as to focus solely on the 400 smaller "up-and-comers" (which in the right environment can outperform their larger rivals). So a company's market cap, especially in relation to other companies, carries great importance, and for this reason we at The Online Investor find value to putting together these rankings daily.
Examine the full RDDT market cap history vs. the full CF market cap history.
At the closing bell, RDDT is up about 1.5%, while CF is off about 1.5% on the day Friday.
Further RDDT Research:

Reddit Now #388 Largest Company, Surpassing CF Industries Holdings

Key Points
AppLovin leverages proprietary AI tools and a scaled software platform to drive industry-leading net margins.
Reddit is successfully diversifying its revenue through data licensing for artificial intelligence and community-targeted advertising.
Which growth-oriented tech player belongs in your long-term portfolio?
In an era where digital advertising and user attention drive growth, AppLovin (NASDAQ:APP) and Reddit (NYSE:RDDT) offer unique ways to play the tech market. Which stock is the better buy today?
AppLovin operates a high-margin marketing platform specialized in mobile gaming, while Reddit leverages its massive community-driven forum to sell ads and license data. Both companies saw significant expansion in the last year, but their underlying financials and target audiences differ significantly. This comparison evaluates their respective strengths and risks for individual investors in 2026.
The case for AppLovin
AppLovin sells marketing tools to mobile app publishers and advertisers, including its Axon Ads Manager and MAX suites. These tools help brands reach over a billion people daily within the mobile gaming ecosystem. In its latest annual report, filed for the year ended December 31, 2024, the company detailed expansion into e-commerce after divesting its Apps business in June 2025. This strategic shift allows the company to focus exclusively on its higher-margin software platform.
In FY 2025, revenue reached nearly $5.5 billion, representing a significant 70% increase compared to the previous year. The company reported net income of approximately $3.3 billion, which resulted in an impressive net margin of roughly 60.8%. This indicates a strong trend of rising profitability as the software-focused model scales efficiently across the global advertising market.
As of its December 2025 balance sheet, the debt-to-equity ratio was approximately 1.7x, which measures total debt obligations against the equity held by shareholders. The current ratio of roughly 3.3x indicates the company has more than triple the short-term assets needed to cover its current liabilities. Free cash flow for FY 2025 was nearly $3.9 billion, representing cash generated from operations minus money spent on capital assets.
The case for Reddit
Reddit operates a platform where users participate in over 100,000 active communities, providing a unique environment for digital advertisers. The company generates revenue through third-party advertising and content licensing for artificial intelligence training as interest in communication stocks grows. According to its latest annual report, filed for the year ended December 31, 2025, its user base reached 130 million daily active uniques by mid-2026.
In FY 2025, revenue reached nearly $2.2 billion, reflecting growth of approximately 69.4% over the prior year. The company posted its first full-year net income of roughly $529.7 million, yielding a net margin of approximately 24.1%. This transition to profitability follows a net loss of over $484 million in the previous fiscal year, highlighting a major financial pivot.
As of its December 2025 balance sheet, the company carried a debt-to-equity ratio of 0.0x and a current ratio of nearly 11.6x, indicating high liquidity. Free cash flow for FY 2025 was approximately $684.2 million, which is cash from operations minus capital expenditures. Note that stock-based compensation represented roughly 49.7% of operating cash flow, which inflates reported cash generation since SBC is a non-cash expense added back in the statement.
Risk profile comparison
AppLovin is heavily dependent on the mobile app ecosystem and the policies of major platform providers like Apple (NASDAQ:AAPL) and Alphabet (NASDAQ:GOOGL) (NASDAQ:GOOG). Changes to tracking or privacy rules by these third parties could negatively impact the effectiveness of its advertising tools. The company also faces intense competition and potential goodwill impairment, alongside a 2025 securities fraud class action that remains an ongoing concern.
Reddit faces risks from revenue concentration, as it relies on a small number of advertisers for the majority of its income. It competes for ad spending against major platforms like Amazon (NASDAQ:AMZN) and Snap (NYSE:SNAP), while also navigating the rise of AI-based information retrieval tools. The company must also manage volatility from retail investor sentiment and a multi-class share structure that concentrates voting power.
Valuation comparison
Reddit carries a higher Forward P/E, while AppLovin trades at a higher P/S ratio relative to its historical averages.
Forward P/E
20.7x
29.8x
P/S ratio
20.0x
14.0x
Valuation metrics sourced from Financial Modeling Prep (FMP) and may differ from other data providers.
Which stock would I buy in 2026?
I'd go with Reddit. To give AppLovin its due, its AI-powered advertising platform is one of the more profitable software businesses being built right now, and the long-term vision of expanding beyond mobile gaming into e-commerce and other verticals is worth taking seriously. But the Q2 revenue miss and below-consensus guidance introduced uncertainty at a moment when the stock was already under significant pressure. That combination is difficult to look past.
Reddit is putting up numbers that would have seemed improbable just two years ago. Advertising revenue has grown at a strong pace for seven consecutive quarters, daily active users keep climbing, and the company is now solidly profitable with strong free cash flow. Its AI licensing business, which sells access to its archive of user conversations to technology companies, adds a revenue stream that could prove durable, though the long-term value of that data will depend on how the AI industry evolves.
AppLovin has a stronger margin profile and a more proven business model. But I like that Reddit is growing faster, diversifying its revenue intelligently, and doing it from a platform that keeps getting more valuable as it scales. For a long-term investor, that combination makes Reddit the stronger pick right now.
Should you buy stock in AppLovin right now?
Before you buy stock in AppLovin, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and AppLovin wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $410,024!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,372,815!*
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Sara Appino has positions in Amazon and Apple. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, and Reddit. The Motley Fool has a disclosure policy.

AppLovin vs. Reddit: Which Technology Stock Is a Better Buy in 2026?

Among the underlying components of the S&P 500 index, we saw noteworthy options trading volume today in Goldman Sachs Group Inc (Symbol: GS), where a total of 18,157 contracts have traded so far, representing approximately 1.8 million underlying shares. That amounts to about 102.2% of GS's average daily trading volume over the past month of 1.8 million shares. Especially high volume was seen for the $1100 strike call option expiring September 18, 2026, with 2,391 contracts trading so far today, representing approximately 239,100 underlying shares of GS. Below is a chart showing GS's trailing twelve month trading history, with the $1100 strike highlighted in orange:
Expand Energy Corp (Symbol: EXE) saw options trading volume of 23,974 contracts, representing approximately 2.4 million underlying shares or approximately 100.8% of EXE's average daily trading volume over the past month, of 2.4 million shares. Particularly high volume was seen for the $86 strike put option expiring October 23, 2026, with 6,618 contracts trading so far today, representing approximately 661,800 underlying shares of EXE. Below is a chart showing EXE's trailing twelve month trading history, with the $86 strike highlighted in orange:
And Reddit Inc (Symbol: RDDT) saw options trading volume of 48,769 contracts, representing approximately 4.9 million underlying shares or approximately 68.3% of RDDT's average daily trading volume over the past month, of 7.1 million shares. Especially high volume was seen for the $170 strike call option expiring September 18, 2026, with 3,651 contracts trading so far today, representing approximately 365,100 underlying shares of RDDT. Below is a chart showing RDDT's trailing twelve month trading history, with the $170 strike highlighted in orange:
For the various different available expirations for GS options, EXE options, or RDDT options, visit StockOptionsChannel.com.
Further GS Research:

Notable Thursday Option Activity: GS, EXE, RDDT

The Fidelity MSCI Communication Services Index ETF is seeing unusually high volume in afternoon trading Thursday, with over 1.8 million shares traded versus three month average volume of about 201,000. Shares of FCOM were up about 0.4% on the day.
Components of that ETF with the highest volume on Thursday were Space Exploration Technologies, trading up about 2.6% with over 66.7 million shares changing hands so far this session, and Warner BROS. Discovery, up about 1% on volume of over 14.0 million shares. Reddit is the component faring the best Thursday, up by about 6.5% on the day, while Cogent Communications Holdings is lagging other components of the Fidelity MSCI Communication Services Index ETF, trading lower by about 6.8%.

Thursday's ETF with Unusual Volume: FCOM

Reddit RDDT is benefiting from accelerating AI and machine-learning investments across its advertising, search and consumer platforms, which are improving engagement and strengthening monetization. In the second quarter of 2026, revenues surged 61% year over year to $805 million, while advertising revenues increased 64% to $762 million. Active advertisers grew more than 70%, highlighting growing demand for Reddit’s high-intent audiences.
Reddit Max is emerging as a key AI-driven growth catalyst. The launch and rapid adoption of Reddit Max, an AI-driven suite for ad automation and optimization, has delivered significant results. Advertiser adoption of Max increased by more than 60% sequentially in the second quarter, and revenues from Max campaigns increased by more than 150%. Features like tailored creatives and dynamic product ads are helping brands achieve better outcomes, such as Lenovo’s 40% higher purchase value with Max campaigns compared to standard campaigns.
The company’s expanding AI portfolio has been noteworthy. Reddit recently made its AI-powered Max campaigns available to all advertisers, expanding access after an earlier beta launch. Max campaigns automate targeting, creative selection, placements and budget allocation while allowing advertisers to maintain strategic control. Early testing showed 17% lower cost per acquisition and more than 27% higher conversions. Reddit also added Advertising API support, integration with Smartly and new asset groups that let advertisers organize and measure different creative sets within one campaign. Powered by AI-based impression-value predictions, Max campaigns are designed to improve traffic, conversions and advertising efficiency across Reddit’s platform.
These initiatives suggest that continued AI innovation could make each advertising impression more valuable, broaden advertiser adoption and deepen user engagement. Reddit expects third-quarter 2026 revenues of $860-$870 million, indicating that its expanding AI-powered monetization engine should remain an important driver of top-line growth.
How Competitors Fare Against RDDT
Despite Reddit’s expanding portfolio, the company faces stiff competition from Meta Platforms META and Snap SNAP. Both Meta Platforms and Snap are also expanding their footprint in the rapidly growing digital ad market.
Meta Platforms is extending AI deeper across its apps, and recommendation and ad-system upgrades are supporting engagement and advertiser returns. WhatsApp, subscriptions, business agents and AI glasses broaden the long-term monetization runway beyond feed advertising and add new enterprise avenues.
Snap’s flagship product, Snapchat, reached 971 million monthly active users and 493 million daily active users in the second quarter of 2026, driven by continued adoption of Augmented Reality Lenses, Spotlight and AI-powered features. Key growth drivers include its AI-powered Smart Campaign Solutions, AI Sponsored Snaps, Sponsored Snaps and Dynamic Product Ads.
RDDT’s Share Price Performance, Valuation and Estimates
RDDT shares have plunged 35% year to date, underperforming the broader Zacks Computer & Technology sector’s 18.2% appreciation and the Internet - Software industry’s 0.2% decline.
RDDT Stock Performance
RDDT shares are overvalued, with a forward 12-month Price/Sales of 6.93X compared with the Computer & Technology sector’s 6.09X. RDDT has a Value Score of D.
RDDT Valuation
The Zacks Consensus Estimate for 2026 earnings is pegged at $5.27 per share, which has increased 0.95% over the past 30 days. This suggests 101.15% year-over-year growth.
Reddit Inc. Price and Consensus
RDDT currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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Reddit Leans Into AI: Can Innovation Accelerate Revenue Growth?

Looking today at week-over-week shares outstanding changes among the universe of ETFs covered at ETF Channel, one standout is the ERShares Private-Public Crossover ETF (Symbol: XOVR) where we have detected an approximate $221.1 million dollar outflow -- that's a 12.6% decrease week over week (from 83,500,000 to 73,000,000). Among the largest underlying components of XOVR, in trading today Veeva Systems Inc (Symbol: VEEV) is down about 3%, Fortinet Inc (Symbol: FTNT) is down about 1.7%, and Reddit Inc (Symbol: RDDT) is lower by about 1.3%. For a complete list of holdings, visit the XOVR Holdings page » The chart below shows the one year price performance of XOVR, versus its 200 day moving average:
Looking at the chart above, XOVR's low point in its 52 week range is $16.37 per share, with $21.78 as the 52 week high point — that compares with a last trade of $20.88. Comparing the most recent share price to the 200 day moving average can also be a useful technical analysis technique -- learn more about the 200 day moving average ».
Exchange traded funds (ETFs) trade just like stocks, but instead of ''shares'' investors are actually buying and selling ''units''. These ''units'' can be traded back and forth just like stocks, but can also be created or destroyed to accommodate investor demand. Each week we monitor the week-over-week change in shares outstanding data, to keep a lookout for those ETFs experiencing notable inflows (many new units created) or outflows (many old units destroyed). Creation of new units will mean the underlying holdings of the ETF need to be purchased, while destruction of units involves selling underlying holdings, so large flows can also impact the individual components held within ETFs.
Further XOVR Research:

Notable ETF Outflow Detected - XOVR, VEEV, FTNT, RDDT

Key Points
AppLovin demonstrates a visibly stronger overall revenue profile than Reddit, as it consistently brings in a significantly higher absolute financial total during every single reporting period evaluated.
When analyzing the financial patterns observed over the last eight quarters, both companies show consistent long-term expansion, though Reddit displays slightly more seasonal quarter-over-quarter volatility compared to the predictably steady upward trajectory seen with AppLovin.
Retail investors evaluating these specific historical financial trends should carefully watch whether the two companies can maintain their rapid revenue acceleration or if the growth gap between them eventually begins to stabilize in upcoming quarters.
AppLovin: Observing the Steady Scaling of Revenue
AppLovin (NASDAQ:APP) primarily generates revenue by offering a specialized digital software suite featuring products like AppDiscovery, which effectively helps mobile application developers market their digital assets globally.
While dealing with multiple law firm inquiries regarding its recent business disclosures, it expanded its advertising tools to all e-commerce merchants and reported an operating margin of 78% for the quarter ended June 30, 2026.
Reddit: A Volatile but Growing Revenue Trajectory Over Time
Reddit (NYSE:RDDT) primarily generates revenue by managing an internet platform where everyday individuals form highly specific digital communities to discuss shared passions, exchange links, and consume multimedia content.
It recently rolled out new automated campaign management tools for advertisers and gained formal inclusion in the S&P 500 index, while reporting an operating margin of 29% for the quarter ended June 30, 2026.
Why Revenue Matters for Investors
Revenue helps everyday investors understand exactly how much gross capital a company successfully captures from its core commercial operations before necessary business expenses are calculated. This metric reveals whether an organization is successfully attracting customers and growing its overall business volume over time.
Comparing the Quarterly Revenue Trends for AppLovin and Reddit
Calendar quarter
AppLovin Revenue
Reddit Revenue
Q3 2024
$835.2 million (quarter ended Sept. 30, 2024)
$348.4 million (quarter ended Sept. 30, 2024)
Q4 2024
$1.4 billion (quarter ended Dec. 31, 2024)
$427.7 million (quarter ended Dec. 31, 2024)
Q1 2025
$1.2 billion (quarter ended March 31, 2025)
$392.4 million (quarter ended March 31, 2025)
Q2 2025
$1.3 billion (quarter ended June 30, 2025)
$499.6 million (quarter ended June 30, 2025)
Q3 2025
$1.4 billion (quarter ended Sept. 30, 2025)
$584.9 million (quarter ended Sept. 30, 2025)
Q4 2025
$1.7 billion (quarter ended Dec. 31, 2025)
$725.6 million (quarter ended Dec. 31, 2025)
Q1 2026
$1.8 billion (quarter ended March 31, 2026)
$663.4 million (quarter ended March 31, 2026)
Q2 2026
$1.9 billion (quarter ended June 30, 2026)
$804.9 million (quarter ended June 30, 2026)
Data source: Company filings. Data as of Sept. 4, 2026.
Foolish Take
Examining the revenue trends for AppLovin and Reddit reveal interesting insights about their businesses. Both depend on digital advertising income to fund their organizations. The ad industry is seasonal, with advertiser spending typically shooting up in the fourth quarter to capture consumers during the key holiday shopping period.
Reddit's sales show this industry trend as its annual income peaks in Q4. Every year, the sales drop in Q1, but display a consistent upward trajectory. This demonstrates the company's ability to capture ad dollars. Key to that success is growth in platform users.
In Q2 of 2026, Reddit's daily active users increased 18% year over year to 130.3 million. This helped it achieve $804.9 million in Q2 sales, which represents the eighth consecutive quarter of more than 60% year-over-year revenue growth.
While Reddit's performance is impressive, AppLovin is perhaps even more so. Until recently, it displayed the typical ad industry Q4 sales spike seen with Reddit. That changed in 2025.
Suddenly, AppLovin's revenue trend showed quarter-over-quarter growth, with Q1 of 2026 exceeding 2025's Q4, which is unusual. This illustrates the company's strength in the mobile advertising arena.
However, AppLovin's stock is down this year, dropping to a 52-week low of $297.50 in August because its sales growth decelerated. Wall Street analysts downgraded the stock as its Q2 revenue of $1.9 billion missed expectations.
Should you buy stock in AppLovin right now?
Before you buy stock in AppLovin, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and AppLovin wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $421,997!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,413,876!*
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Robert Izquierdo has positions in Reddit. The Motley Fool has positions in and recommends Reddit. The Motley Fool has a disclosure policy.

AppLovin vs. Reddit: What Quarterly Revenue Growth Patterns Tell Investors About These Media Companies

Key Points
The transaction involved the sale of 18,000 shares for ~$2.7 million at $148.02 per share on August 31, 2026.
Traded shares were equal to 5% of the total equity stake held before the filing.
The activity was conducted indirectly through The XYZ Revocable Trust and a grantor retained annuity trust and involved the exercise of 18,000 options.
The sale was executed under a Rule 10b5-1 trading plan adopted on May 19, 2025, suggesting a routine liquidity move.
Steve Ladd Huffman, CEO & President of Reddit, Inc. (NYSE:RDDT), sold 18,000 shares of Class A Common Stock on Aug. 31, 2026, according to an SEC Form 4 filing.
Transaction summary
Transaction value
$2.7 million
Shares sold
18,000
Post-transaction value
$50.7 million
Transaction value based on SEC Form 4 weighted average sale price ($148.02); post-transaction value based on Aug. 31, 2026, market close ($147.81).
Key questions
What was the mechanism for this transaction?
Steve Ladd Huffman exercised 18,000 options at $25.29 per share and immediately sold the resulting Class A Common Stock at $148.02 per share in the open market.
How does the current valuation compare to the company's recent performance?
Shares were priced at $148.02 at a time when the company saw a 34% decline in stock value over the 12-month period ending on Aug. 31, 2026, the transaction date.
What is the status of the insider's remaining equity interest?
Following this transaction, the CEO & President maintains indirect ownership of 343,329 shares through The XYZ Revocable Trust and a grantor-retained annuity trust, as well as 1.0 million indirect derivative securities.
Company Overview
Share Price (as of market close 2026-09-01)
$144.64
Market Capitalization
$27.8 billion
Revenue (TTM)
$2.8 billion
Net Income (TTM)
$871.1 million
Company Snapshot
Reddit operates a digital platform that hosts thousands of user-generated communities organized by topic, generating revenue primarily through advertising, premium subscriptions, and licensing arrangements with third parties.
The company monetizes its engaged user base through targeted advertising placements, subscription services offering enhanced features, and data licensing agreements with enterprise clients seeking insights from community discussions.
Reddit serves a diverse global audience spanning individual users seeking community engagement, advertisers targeting niche demographics, and enterprise customers leveraging the platform's data and insights for research and commercial purposes.
Reddit operates one of the internet's largest community-driven platforms with approximately 2.8 billion in annual revenue and a market capitalization of $27.8 billion. The company maintains a competitive advantage through its network of highly engaged communities, proprietary user-generated content, and established relationships with both advertisers and enterprise data consumers. With 2,555 employees based in San Francisco, Reddit continues to expand its monetization capabilities while maintaining the platform's foundational community-centric model.
What this transaction means for investors
As previously stated, Steve Huffman's sale of Reddit shares is more than likely a liquidity event.
Indeed, the Reddit CEO exercised options on 18,000 shares. However, that represents only a tiny portion of the 343,329 shares of the social media stock he still holds.
Moreover, investors should note that he pre-planned the sale under a Rule 10b5-1 trading plan adopted in May. Thus, this transaction was likely to occur regardless of price action or his views on the company's future.
Additionally, the number of shares he still holds indicates Huffman is likely bullish on the company, and probably with good reason. Despite losing more than one-third of its value over the last year, the stock has generally trended upward since its debut in March 2024.
Furthermore, revenue is on a rapid upward trajectory, having climbed to almost $1.47 billion in the first half of 2026, a 65% year-over-year increase.
With the company turning profitable last year, its unique approach to social media is likely to continue resonating with users and investors alike. Thus, unless Huffman starts making significant sales that do not involve the exercising of options, Reddit shareholders should not worry about these specific transactions.
Should you buy stock in Reddit right now?
Before you buy stock in Reddit, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Reddit wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $446,157!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,377,357!*
Now, it’s worth noting Stock Advisor’s total average return is 984% — a market-crushing outperformance compared to 212% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.
*Stock Advisor returns as of September 3, 2026.
Will Healy has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Reddit. The Motley Fool has a disclosure policy.

Reddit CEO Steve Huffman Sells 18,000 Shares for $2.7 Million

Reddit RDDT shares have plunged 14.7% in the past three months, underperforming the broader Zacks Computer & Technology sector’s 4.4% decline. The Zacks Internet - Software industry has increased 6.4% in the same time frame.
The company shares have also underperformed its peers, which include Pinterest PINS, META Platforms META and Snap SNAP. These companies are expanding their footprint in the digital advertising market. Shares of Pinterest have gained 2.8%, while Meta Platforms and Snap have lost 7.2% and 6.7%, respectively, in the trailing three-month period.
The decline can be attributed to choppy and declining search referral traffic, particularly late in the second quarter of 2026, which led to a slight decrease in daily active users and heightened volatility. Low visibility into external search trends also remains a headwind. Challenging macroeconomic uncertainties and stiff competition in the digital advertising market remain concerns.
RDDT Stock Performance
Despite the headwinds, Reddit’s expanding advertising portfolio, strong user engagement, including rising daily and weekly active users, gains in Average Revenue Per User (ARPU) and the expansion of advertiser tools such as Dynamic Product Ads, Reddit Pixel and CAPI have been key catalysts.
RDDT Benefits From Strong Advertising Portfolio
Reddit is benefiting from a unique position in the digital advertising landscape. In the second quarter of 2026, Reddit achieved its eighth consecutive quarter of more than 60% revenue growth, with advertising revenues rising 64% year over year to $762 million. The platform now reaches more than 0.5 billion people weekly, including more than 130 million daily users. New app user retention improved 50% year over year, indicating that product enhancements are translating into deeper engagement and higher-quality user growth.
Reddit’s innovation in its ad stack has been a major growth driver. The launch and rapid adoption of Reddit Max, an AI-driven suite for ad automation and optimization, has delivered significant results. Advertiser usage of Max grew more than 60% from the first quarter, and revenues from Max campaigns increased by more than 150%. Features like tailored creatives and dynamic product ads are helping brands achieve better outcomes, such as Lenovo’s 40% higher purchase value with Max campaigns compared to standard campaigns.
The company is also expanding its advertiser base and ecosystem, making it easier for businesses of all sizes to succeed on Reddit. Scaled channel revenues, which include mid-market and SMBs, doubled year over year, and active advertisers grew more than 70% in the second quarter of 2026. Integrations with platforms like Shopify and a growing ads API ecosystem are streamlining onboarding and campaign management, further fueling Reddit’s commercial momentum.
Reddit Gains From Strong User Growth
Reddit gains from robust user growth, positioning itself as a formidable player in the digital advertising space. In the second quarter of 2026, Reddit's daily active uniques (DAUq) reached 130.3 million, marking an 18% year-over-year increase, while weekly active uniques (WAUq) increased to 514.6 million, up 24%. International DAUq rose 28%, outpacing U.S. growth at 6%, and international WAUq rose 35%, signaling strong global momentum. Growing engagement is translating into stronger monetization. In the second quarter of 2026, Global average revenue per unique (ARPU) jumped 36% year over year to $6.18. U.S. ARPU surged 51% to $11.85, while international ARPU increased 31% to $2.26.
Reddit is benefiting from successful product innovation and user engagement strategies. The company’s focus on improving the experience for new users, particularly through updated feed models and easier posting mechanisms, has led to a 50% year-over-year increase in new app user retention. Features like video in comments and interactive games have expanded engagement opportunities, while efforts to convert web users to app users have resulted in higher retention and more valuable user cohorts.
Earnings Estimates for Reddit Show Upward Trend
RDDT’s expanding portfolio and rising user engagement are expected to drive the company’s top-line growth.
For the third quarter of 2026, management expects revenues between $860 million and $870 million, representing 47% to 49% year-over-year growth. The midpoint implies about 48% year-over-year growth. The Zacks Consensus Estimate for third-quarter revenues is pegged at $886.87 million, indicating year-over-year growth of 51.62%.
For the third quarter, the consensus mark for earnings is pegged at $1.33 per share, which has increased 2.3% over the past 30 days. This implies year-over-year growth of 66.25%.
Reddit Inc. Price and Consensus
RDDT Stock Is Overvalued
Reddit stock is currently trading at a premium, as suggested by the Value Score of D.
In terms of the forward 12-month Price/Sales ratio, RDDT is trading at 6.75X, higher than the broader Zacks Computer & Technology sector’s 6.12X, Pinterest’s 2.24X, Meta Platforms’ 5.1X and Snap’s 1.25X.
RDDT Valuation
Conclusion
Reddit’s prospects benefit from strong user engagement and an expanding advertising portfolio. However, the company faces search traffic volatility, intense competition in the digital advertising space and a stretched valuation, which could limit near-term upside.
Reddit currently has a Zacks Rank #3 (Hold), suggesting that it may be wise to wait for a more favorable entry point to accumulate the stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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Should You Hold on to RDDT Stock Despite Its 15% Dip in Three Months?

Key Points
Reddit achieved its eighth consecutive quarter of 60% year-over-year revenue growth.
It's getting higher revenue growth rates from international markets, but U.S. revenue is still trending much higher.
Strengthening fundamentals and a falling stock price have created a misalignment that will soon be corrected.
Reddit (NYSE: RDDT) has had a bad year. Its stock is down by more than 30% year-to-date, making it one of the worst-performing stocks in the S&P 500.
However, that doesn't mean Reddit is doing poorly as a company. In fact, now looks like a good buying opportunity. Reddit's year-to-date performance does not align with its fundamentals.
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Reddit's financials are soaring
A lagging stock price does not always indicate poor fundamentals, and Reddit is a good example. The social media company's revenue soared by 61% year over year in its second quarter. Net income also almost tripled year over year.
These aren't one-off results, either. This was Reddit's eighth consecutive quarter of delivering more than 60% year-over-year revenue growth. Reddit is making some money by letting artificial intelligence training companies use its data, but almost all of its revenue still comes from online ads.
Its advertising segment was up 64% year over year, and accounted for roughly 95% of Reddit's total revenue. Growth and rising margins enabled Reddit to repurchase $235 million in shares in the quarter.
This growth is built on more users joining the platform
An 18% year-over-year boost in daily active users demonstrates that the current momentum is sustainable. Some companies scramble to raise advertising costs and set fees to achieve higher revenue growth as user growth declines. However, a user base built on healthy growth makes it easier for Reddit to realize high growth rates without penny-pinching its advertisers.
It's not just daily active users that are on the upswing, either. Reddit closed the quarter with 514.6 million weekly active users, which was a 24% year-over-year increase.
Reddit trades at a 30.5 forward P/E ratio, which isn't too far off from Meta Platforms' (NASDAQ: META) 19 forward P/E ratio when considering their fundamental progress. Meta Platforms delivered only 28% year-over-year revenue growth and a 3% year-over-year uptick in daily active users.
Reddit already trades at a premium to Meta Platforms, but it's fair to argue that Reddit may deserve a higher premium. Its net income is also growing at a much faster rate than Facebook's parent company, implying that its forward P/E ratio will quickly become more attractive than its current level.
U.S. revenue is still growing at a fast rate
Another big advantage Reddit has over most social media platforms is that its U.S. user base is still growing at a respectable rate. The U.S. is the most lucrative region for online platforms, including Reddit, as seen in Reddit's financial results.
Reddit has an average revenue per user of $11.85 in the U.S., compared to a $2.26 ARPU in the rest of the world. Furthermore, U.S. ARPU was up 51% year over year, compared with 31% year-over-year growth in its international ARPU.
It has also become common for companies to report higher user and revenue growth rates in international regions than in the U.S., where markets are more saturated. However, Reddit is still delivering respectable U.S. results, with U.S. weekly active users up 9% year over year, and the international figure up 24%. Q2 was a soft spot for Daily Users in America due to "choppy" search referrals, but Reddit has seen these challenges before.
Reddit is achieving higher U.S. growth numbers than Meta Platforms' global numbers. It demonstrates Reddit still has more market share to tap into, while Meta Platforms has fewer new customers it can add to its family of apps.
International revenue is still up more than U.S. revenue, since Reddit is attracting more users from different regions. Eventually, Reddit will lean more heavily into international opportunities to drive higher revenue growth. However, with U.S. activities still playing a critical role and growing at an exceptional rate, Reddit looks poised to rebound from its lows.
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Marc Guberti has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Meta Platforms and Reddit. The Motley Fool has a disclosure policy.

Indicator	TTM Median
P/E	38.47 16.68
Price/Sales	11.47 1.00
P/B	8.51 1.55
P/FCF	31.37 10.80

Indicator	TTM Median
ROE	29.05 13.39
ROA	26.35 5.10
ROI	0.00 7.42
Net Worth	28.49 0.66
Quick Ratio	0.00 0.90
Current Ratio	12.74 1.14

Indicator	TTM Median
Net Profit Margin	28.62 9.86
Operating Margin	28.28 14.35
Gross Margin	91.35 55.03
Return on tangible equity	26.06 26.06

Indicator	TTM Median
EPS	1.25 0.31
EPS Forecast	0.99 0.25
Revenue	663.00M 82.50M
Gross Profit	735.00M —
EBITDA	236.00M —

Reddit, Inc.

Recent quarterly and TTM performance

Valuation

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Revenue