Reddit Inc. shocked Wall Street this week as it reported earnings that far exceeded analyst expectations, sending its stock price soaring. The company also revealed a significant increase in ad revenue, further boosting investor confidence and pushing the stock to record highs.
Reddit, which went public in early 2024, had been facing skepticism over its ability to monetize its vast and diverse user base. But the recent earnings report proved critics wrong, signaling that the social media giant is on the right path toward sustainable growth.
In its latest quarterly report, Reddit posted revenue of $262 million, surpassing the consensus estimate of $225 million. Even more impressively, the company reported an adjusted net income of $28 million, compared to analysts’ expectations of a slight loss.
This marks Reddit’s first profitable quarter since its IPO, a milestone that CEO Steve Huffman described as a “turning point” for the platform.
“Our focus on community engagement and targeted advertising is clearly paying off,” said Huffman during the earnings call. “We’re seeing brands increasingly interested in Reddit’s highly engaged and niche audiences.”
Reddit’s advertising business was the star of the show. Ad revenue jumped 39% year-over-year, reaching $181 million. The company credited this growth to its new AI-driven ad tools, enhanced brand safety measures, and expansion into international markets.
This development is crucial because advertising has long been considered Reddit’s biggest challenge. Unlike rivals like Meta (Facebook) and X (formerly Twitter), Reddit had struggled to convince advertisers that its freewheeling, forum-style communities were worth investing in. That narrative now appears to be shifting.
“Reddit has matured significantly as an ad platform,” said tech analyst Jordan Matthews from MarketEdge Research. “Their ability to deliver relevant ads while maintaining community trust is a tough balance, and they’re beginning to nail it.”
Following the announcement, Reddit’s stock surged over 18% in after-hours trading and continued to climb the next day. Shares closed at $64.75, up from $54.82 the previous day, marking one of the platform’s best single-day performances since its IPO.
This strong market reaction reflects not only the earnings beat but also growing investor confidence in Reddit’s long-term potential.
“Investors are starting to believe in Reddit as more than just a niche site,” said finance expert Laura Jenkins of Insight Capital. “They’re seeing a social media platform with real, scalable revenue streams.”
Read more on Reddit’s IPO performance here
The platform also reported growth in its daily active users (DAUs), with numbers climbing to 76 million, up 9% from the previous quarter. Reddit communities—known as subreddits—continue to thrive across a variety of categories including gaming, finance, health, and entertainment.
Reddit’s ability to foster highly specific online communities has become one of its strongest competitive advantages. With features that promote deep engagement, users often spend more time on the platform compared to other social media sites.
Huffman noted, “We’re proud of the quality of conversations happening on Reddit. We remain committed to supporting moderators and community leaders who are the backbone of our ecosystem.”
Another highlight from the earnings call was Reddit’s continued focus on international growth. The company launched localized versions of its platform in Germany, Brazil, and Japan over the past quarter, helping to bring in millions of new users.
In terms of innovation, Reddit rolled out enhanced video features and AI-powered content moderation tools. These new capabilities are aimed at improving the user experience while reducing harmful content.
According to Reddit’s CTO Chris Slowe, “Technology is at the heart of everything we do. We are investing heavily in machine learning and AI to make Reddit faster, safer, and more personalized.”
Explore Reddit’s AI innovations
Reddit’s unexpected earnings beat and ad revenue success signal a major shift in the company’s trajectory. No longer just a quirky message board platform, Reddit is beginning to prove itself as a legitimate player in the social media and digital advertising space.
The company’s strong Q1 performance may also help it attract more institutional investors, something it struggled with initially due to concerns over content moderation and brand safety.
As Reddit continues to expand globally and enhance its platform, analysts believe its next few quarters could show even stronger results.
Financial institutions responded positively to the earnings report. Goldman Sachs upgraded Reddit’s stock rating from “Neutral” to “Buy,” citing strong revenue performance and promising growth prospects.
“Reddit is turning a corner,” said Goldman Sachs analyst Priya Anand. “Its monetization strategy is working, and its user engagement levels are among the best in the industry.”
Other firms, including Morgan Stanley and JPMorgan, also increased their price targets for Reddit stock.
See full analyst breakdown here
Reddit’s Q1 2025 results mark a new chapter in the company’s journey. With rising ad revenue, growing user numbers, international reach, and a profitable quarter under its belt, Reddit has proven it can thrive in the competitive social media market.
Investors, analysts, and advertisers will be watching closely to see if this momentum can continue in the next earnings cycle. But for now, Reddit’s surprise win has cemented its place as one of tech’s most exciting comeback stories of the year.
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