Reddit Inc. is set to announce its third-quarter results for 2025 on October 30, following market closure. Analysts predict earnings of $0.52 per share with an expected revenue of approximately $549 million. The company’s stock has soared by 27% this year, buoyed by growth in advertising and data-licensing, which has boosted investor confidence.
This quarter could mark Reddit’s fifth consecutive profitable quarter, a significant turnaround for a company that faced losses leading up to its initial public offering. Advertising sales continue to be the primary revenue generator, with increased demand and enhanced campaign tools fueling this growth. Additionally, Reddit has tapped into the burgeoning AI sector, monetizing access to its vast repository of user-generated posts for training language models, thereby establishing a new revenue stream less reliant on fluctuating ad markets.
As investors look ahead, they are particularly interested in the continuation of this upward momentum. Last quarter, Reddit reported a remarkable 78% increase in revenue year-over-year, with advertising sales surging by 84%. Key points of interest will include the contribution of AI partnerships to the overall revenue and the speed at which this new segment can scale. Furthermore, metrics such as daily active users, user engagement, and average revenue per user (ARPU) will be crucial in determining how effectively Reddit can convert user traffic into consistent income.
Reddit’s shares currently trade at approximately 44 times forward price-to-earnings ratio, a figure that exceeds many of its social media counterparts. Investors are hopeful that this valuation will be maintained as long as the company’s profit margins continue to grow and AI partnerships generate predictable revenues. A strong performance coupled with optimistic future guidance could help sustain the current stock rally. Conversely, any disappointing headlines or a softer outlook might challenge the justifiability of its valuation.