Recommendation: Buy
| Entry Date | Symbol | Recommendation | Entry Price (USD) | Target 1 (USD) | Target 2 (USD) | Holding Duration | Position Status | Return(%)* |
|---|---|---|---|---|---|---|---|---|
| 24 Jun, 25 | RDDT | Buy | USD 139.04 | USD 146.0 | USD 155.0 | 1 day | Closed |
10.62%
|
*Return(%) represent the percentage change between the entry price and exit price of the recommendation.
Data Powered by EOD Historical Data (“EODHD”).
Profitability Achievement: Net income of $26.2 million, reversing a loss of $575.1 million in Q1 2024.
Revenue Growth: Q1 2025 revenue grew 61% year-over-year to $392.4 million
Heavy Reliance on Ad Revenue: $358.6 million of total revenue (91%) came from advertising, exposing the business to cyclical ad market fluctuations.
High Operating Expenses: GAAP operating expenses totaled $351.4 million, which remains substantial despite improved efficiencies
Reddit's heavy reliance on advertising revenue and its exposure to volatile external traffic sources pose risks to consistent revenue growth and user acquisition stability
| Entry Price | Support* | Target 1 | Target 2 |
|---|---|---|---|
| 139.04 | 127.92 | 146.0 | 155.0 |
Data Source: REFINITIV, Analysis: StockNextt
*Support can be considered as an indicative stop-loss, and if prices move below that level on closing basis individuals may evaluate exiting the position depending on their risk appetite, previous holdings, and other factors considered. The support and resistance levels may need to be re-evaluated within 4-6 weeks’ time frame depending on the stock price movements from the date of recommendation on the stock.
Strong Revenue and Profitability Milestones: In the first quarter of 2025, Reddit, Inc. demonstrated robust financial growth with a reported revenue of USD 392.4 million, marking a substantial 61% increase year-over-year. The company achieved GAAP profitability with a net income of USD 26.2 million and a net margin of 6.7%, a significant turnaround from the net loss of USD 575.1 million in the same quarter of the previous year. This marked the third consecutive quarter with over 60% revenue growth, indicating sustained momentum post-IPO.
Exceptional User Growth and Engagement: User metrics improved notably, with Daily Active Uniques (DAUq) reaching 108.1 million, and Weekly Active Uniques (WAUq) rising to 401.3 million—both reflecting 31% growth year-over-year. International markets played a pivotal role, with international DAUq increasing by 41%, outpacing the U.S. growth rate of 21%. This growth was propelled by enhanced machine translation capabilities, now available in 13 languages, fostering Reddit's international expansion.
Diversified Revenue and Advertising Expansion: Advertising revenue remained the core revenue stream, contributing USD 358.6 million and growing 61% from the previous year. Other revenue, including from shopping ads and developer tools, increased by 66% to USD 33.7 million. Reddit's focus on performance advertising yielded strong results, with over 60% of ad revenue attributed to performance-based formats. Machine learning enhancements in ad targeting and the launch of Dynamic Product Ads further improved ad returns.
Operational Efficiency and Cash Generation: Reddit showcased impressive operational discipline. Operating cash flow surged to USD 127.6 million, improving by USD 95.5 million year-over-year. Free cash flow reached USD 126.6 million, reflecting strong liquidity generation with minimal capital expenditure of just USD 1.0 million. Adjusted EBITDA rose sharply to USD 115.3 million from USD 10 million in Q1 2024, with a margin improvement to 29.4% from 4.1%.
Product Innovation and Platform Enhancements: Key product developments included the global rollout of Reddit Answers, an AI-powered conversational search tool, which achieved 1 million weekly active users. Reddit also launched new user tools to enhance content quality and reduce moderator burden. The platform saw growing engagement with its Developer Platform, registering 400,000 weekly active players, underlining the diversification of its content ecosystem.
Accelerated Internationalization: Reddit’s international strategy yielded impressive results, especially in markets like Brazil, France, and Spain. Brazil, in particular, experienced an 80% year-over-year increase in DAUq and a doubling of active local communities. Machine translation and localized content played a critical role in driving both user engagement and community development.
Shareholder Discipline and Future Outlook: The company maintained disciplined share management, with fully diluted shares outstanding decreasing slightly to 206.0 million. Looking forward to Q2 2025, Reddit projects revenue between USD 410 million to USD 430 million and Adjusted EBITDA in the range of USD 110 million to USD 130 million. These forecasts underscore confidence in scaling operations without sacrificing profitability.
Considering recent key business, financial updates, current trading levels, and key business risks, a ‘Buy’ recommendation has been given on Reddit, Inc. (NYSE: RDDT) at the current market price of USD 139.04, as on June 24, 2025 at 6:47 AM PDT.
Data Powered by EOD Historical Data (“EODHD”).
Sector: Industry:
| Company | Change (USD) | Price (USD) | Trailing PE (x) | Forward PE (x) | Price Sales TTM (x) | Price to Book Value (x) |
|---|---|---|---|---|---|---|
| RDDT Reddit, Inc. |
-2.31 1.45% | 157.03 | - | - | - | - |
Data Powered by EOD Historical Data (“EODHD”).
Related Risks: This report may be looked at from high-risk perspective and recommendations are provided are for a short duration. Recommendations provided in this report are solely based on technical parameters, and the fundamental performance of the stocks has not been considered in the decision-making process. Other factors which could impact the stock prices include market risks, regulatory risks, interest rates risks, currency risks, social and political instability risks etc.
Note 1: Past performance is not a reliable indicator of future performance.
Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is Jun 24,2025. The reference data in this report has been partly sourced from REFINITIV.
Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock.
Target: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Target 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Target 2 may act as the crucial resistance level for the stock.
Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.
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