GET DAILY SIGNALSReddit (RDDT) Posts +53% Revenue Growth but Shares Fall -12.6% on Guidance
Key Takeaways
- Reddit reported third quarter 2026 revenue of $895 million, up 53% year over year and slightly above Wall Street estimates of about $877 million.
- Diluted earnings per share (EPS, or profit divided by shares outstanding) came in at $1.40, ahead of consensus estimates of roughly $1.33.
- Adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) rose 70% to $402 million, a 45% margin, narrowly topping expectations.
- Daily active uniques (DAUq) grew 12% to 130.3 million, but U.S. DAUq slipped 2% year over year — a metric investors watched closely.
- Fourth quarter revenue guidance of $1.0 billion to $1.03 billion landed below consensus, sending shares sharply lower after hours.
- You can get more information about the ticker's Major News, Today's Price Move, Price Targets, and Forecast on additional pages.
- For broader market ideas, explore Trending AI Robots.
Why This Quarter Matters for Reddit
Reddit has emerged as one of the faster-growing names in digital advertising, and each earnings release serves as an important checkpoint on whether that momentum can continue. The company crossed $3 billion in trailing twelve-month revenue this quarter and joined the S&P 500, highlighting its increasing prominence. Investors are focused on two main questions: whether user engagement continues to expand and whether AI-driven ad products such as Reddit Max can turn that activity into higher revenue. Given the premium valuation relative to peers, expectations were elevated, and the market reaction underscores how sensitive the stock has become to forward guidance as well as the headline results.
Breaking Down the Reported Numbers
Reddit posted another period of solid expansion. Total revenue climbed 53% year over year to $895 million, with advertising revenue rising 54% to $847 million and other revenue increasing 35% to $48 million. Net income advanced 74% to $283 million, representing 32% of revenue, while diluted EPS grew 75% to $1.40 (basic EPS reached $1.47). Adjusted EBITDA expanded 70% to $402 million for a 44.9% margin, and operating cash flow nearly doubled to $364 million. Free cash flow came in at $363 million.
On the engagement side, global DAUq increased 12% to 130.3 million and weekly active uniques rose 16% to 515.2 million. International DAUq jumped 24%, though U.S. DAUq eased 2% to 50.7 million. Average revenue per unique rose 36% globally to $6.87, supported by a 53% U.S. increase to $13.82. Management guided fourth quarter revenue to $1.0–$1.03 billion and adjusted EBITDA to $480–$510 million, with both midpoints below consensus and that weighed on the shares. I also checked this using Tickeron’s AI Screener to see how the stock compares with others in the sector.
Market Reaction and What It Signals
The response was quick and negative. Despite the top- and bottom-line beats, Reddit shares fell roughly 12.6% to about $113 shortly after the release as investors zeroed in on the fourth quarter outlook. Both revenue and adjusted EBITDA guidance midpoints came in below analyst consensus, pointing to a slowdown in growth for the final quarter of the year. The dip in U.S. DAUq heightened concerns about whether the core market is maturing, even while international growth stayed strong. The move illustrates a familiar pattern for high-growth ad platforms: clearing the current quarter is no longer sufficient when forward expectations are already priced for continued acceleration.
What to Watch Going Forward
Looking ahead, the key will be how Reddit balances growth with profitability. The fourth quarter revenue guide of $1.0–$1.03 billion implies year-over-year growth near 40%, a noticeable step down from the 53% delivered this quarter. Whether that reflects conservatism or a real softening in ad demand should become clearer over the coming periods.
User trends remain the central signal. With U.S. DAUq down year over year, a return to domestic engagement growth alongside continued international expansion will be essential to maintaining advertising momentum. Reddit has also noted volatility in search referral traffic as AI-powered search summaries develop, a factor worth monitoring given its potential impact on logged-out users.
Finally, attention should stay on Reddit’s AI advertising initiatives, including Reddit Max. Rising research, sales, and marketing expenses have accompanied the company’s expansion, and investors will want to see that spending support durable revenue growth without reversing the margin improvements already achieved.
AI Tools I Rely On for Deeper Analysis
When evaluating high-growth names like this one, I often turn to Tickeron’s AI Screener to quickly filter for technical patterns, fundamentals, and AI-driven signals across the broader market. It helps surface comparable ideas and track shifts in sentiment without spending hours on manual screening. In this case it confirmed the momentum profile relative to peers and highlighted a few other ad-tech names worth watching alongside Reddit.
Disclaimer
The information on this webpage is provided for general informational and educational purposes only and is not intended as investment advice, a recommendation to purchase or sell any security, or an offer or solicitation related to investments. It does not consider your personal financial situation, goals, or risk profile, and all investing carries inherent risks, including the possibility of losing your entire investment. For more details, please review our full disclaimer.
Contributor
Sergey Savastiouk, Ph.D. has a degree in Applied Mathematics from Moscow University and has extensive experience as an entrepreneur, investor, manager, and mathematician. His professional expertise is in applied mathematics, mathematical modeling, system and pattern analysis, and software and hardware system integration. He has served as the CEO of several hi-tech start-up companies and nonprofit organizations, which has given him proven capabilities in business strategy for high-tech start-up companies, market assessment, company formation, team building, product development, marketing, and sales. He has published numerous articles in journals and magazines on related fields. As a retail investor, he spent 15 years developing his proprietary trading and quantitative algorithms (now Tickeron’s A.I.), which brought him significant returns in trading the stock market. His current work and goal in founding Tickeron is to bring professional, sophisticated stock market analysis capabilities to retail investors via an easy-to-use interface.
RDDT in downward trend: price dove below 50-day moving average on October 21, 2026
RDDT moved below its 50-day moving average on October 21, 2026 date and that indicates a change from an upward trend to a downward trend. In 11 of 12 similar past instances, the stock price decreased further within the following month. The odds of a continued downward trend are 90%.
Technical Analysis (Indicators)
Bearish Trend Analysis
The Momentum Indicator moved below the 0 level on October 22, 2026. You may want to consider selling the stock, shorting the stock, or exploring put options on RDDT as a result. In 31 of 37 cases where the Momentum Indicator fell below 0, the stock fell further within the subsequent month. The odds of a continued downward trend are 84%.
The Moving Average Convergence Divergence Histogram (MACD) for RDDT turned negative on October 23, 2026. This could be a sign that the stock is set to turn lower in the coming weeks. Traders may want to sell the stock or buy put options. Tickeron's A.I.dvisor looked at 25 similar instances when the indicator turned negative. In 19 of the 25 cases the stock turned lower in the days that followed. This puts the odds of success at 76%.
The 10-day moving average for RDDT crossed bearishly below the 50-day moving average on October 23, 2026. This indicates that the trend has shifted lower and could be considered a sell signal. In 5 of 6 past instances when the 10-day crossed below the 50-day, the stock continued to move higher over the following month. The odds of a continued downward trend are 83%.
Following a 3-day decline, the stock is projected to fall further. Considering past instances where RDDT declined for three days, the price rose further in 50 of 62 cases within the following month. The odds of a continued downward trend are 80%.
Bullish Trend Analysis
The RSI Indicator entered the oversold zone -- be on the watch for RDDT's price rising or consolidating in the future. That's also the time to consider buying the stock or exploring call options.
The Stochastic Oscillator shows that the ticker has stayed in the oversold zone for 3 days. The price of this ticker is presumed to bounce back soon, since the longer the ticker stays in the oversold zone, the more promptly an upward trend is expected.
Following a +2.21% 3-day Advance, the price is estimated to grow further. Considering data from situations where RDDT advanced for three days, in 132 of 144 cases, the price rose further within the following month. The odds of a continued upward trend are 90%.
RDDT may jump back above the lower band and head toward the middle band. Traders may consider buying the stock or exploring call options.
Fundamental Analysis (Ratings)
The Tickeron SMR rating for this company is 33 (best 1 - 100 worst), indicating very strong sales and a profitable business model. SMR (Sales, Margin, Return on Equity) rating is based on comparative analysis of weighted Sales, Income Margin and Return on Equity values compared against S&P 500 index constituents. The weighted SMR value is a proprietary formula developed by Tickeron and represents an overall profitability measure for a stock.
The Tickeron Price Growth Rating for this company is 75 (best 1 - 100 worst), indicating slightly worse than average price growth. RDDT’s price grows at a lower rate over the last 12 months as compared to S&P 500 index constituents.
The Tickeron Valuation Rating of 78 (best 1 - 100 worst) indicates that the company is slightly overvalued in the industry. This rating compares market capitalization estimated by our proprietary formula with the current market capitalization. This rating is based on the following metrics, as compared to industry averages: RDDT's P/B Ratio (7.887) is slightly higher than the industry average of (1.008). P/E Ratio (29.346) is within average values for comparable stocks, (-58.119). Projected Growth (PEG Ratio) (0.714) is also within normal values, averaging (17.274). Dividend Yield (0.000) settles around the average of (0.970) among similar stocks. P/S Ratio (11.507) is also within normal values, averaging (71.888).
The Tickeron PE Growth Rating for this company is 94 (best 1 - 100 worst), pointing to worse than average earnings growth. The PE Growth rating is based on a comparative analysis of stock PE ratio increase over the last 12 months compared against S&P 500 index constituents.
The Tickeron Profit vs. Risk Rating rating for this company is 100 (best 1 - 100 worst), indicating that the returns do not compensate for the risks. RDDT’s unstable profits reported over time resulted in significant Drawdowns within these last five years. A stable profit reduces stock drawdown and volatility. The average Profit vs. Risk Rating rating for the industry is 94, placing this stock worse than average.
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