Reddit Earnings Report-Can Ad Revenue Growth Outshine Wall Street User Growth Fears

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Nama Cohen is a highly experienced professional with over 20 years of experience in the finance industry. She has a deep understanding of corporate finance and global-macro research, which she leverages to provide valuable insights to her clients. Nama is an accomplished buy-side trader who has a proven track record of generating significant returns for her clients.
 

•  01 May 2025
 

Reddit's stock has seen significant volatility in recent months, and all eyes are now on its Q1 earnings report. Investors are hoping for strong results — with expected revenue of around $370 million — but concerns linger over slowing user growth, a key metric that could shape the platform's future.

Despite a recent surge ahead of the report, Reddit’s stock $RDDT remains about 50% below its February peak, when it hit a 52-week high of $225 following its first-ever earnings-per-share profit in October.

Wall Street analysts forecast a profit of $0.02 per share and revenue of $369.5 million, representing a 52% year-over-year increase. This aligns closely with Reddit’s own guidance from the previous quarter, where it projected $360–370 million in revenue and EBITDA between $80–90 million.

Nearly all of Reddit’s revenue stems from digital advertising, and analysts from B. Riley believe this quarter’s growth is driven by an increase in daily active users and ad impressions. Reddit's advertising edge comes from its unique community structure — focused, topic-based “subreddits” — which enable highly targeted ad placements.

As noted by Oppenheimer analysts, this niche-based interaction offers “very specific signals about users’ interests”, making it a highly attractive advertising opportunity. In fact, "Reddit" is the sixth most searched term on Google, further highlighting its digital footprint.

Reddit biggest challenge remains sustaining user growth while maintaining the deep user engagement that differentiates it from mainstream social platforms like Meta or X. Unlike other social media platforms, Reddit's value lies in its passionate communities, which are critical for retaining users and appealing to advertisers.

The company is also navigating intensifying competition in the digital ad space, dominated by giants like Meta (Facebook) and Google, which forces Reddit to continuously prove the unique value of its ad inventory to brands.

One of Reddit’s key strengths is the rich user data generated through organic interactions. This allows for precise audience segmentation, giving marketers a competitive edge in an era where targeted advertising is increasingly essential.

As Reddit gears up to release its latest earnings, the question remains - Will ad revenue growth be enough to offset concerns about a slowdown in user growth? Either way, Reddit's Q1 earnings report will be a crucial moment that could shape the narrative for months to come — both on Wall Street and across the Reddit community itself.