Reddit Stock Soars 6.27% on Q3 Earnings Boom, AI-Driven Ad Revenue Jump

The share price rose to its highest level so far this month today, with an intraday gain of 6.27%.

Reddit’s Q3 2025 results fueled optimism, with revenue surging to $584.91 million and net income reaching $162.66 million. Strategic AI integration, including data licensing deals with OpenAI and Google, has enabled the platform to monetize user content without heavy infrastructure costs. International user growth accelerated to 31%, outpacing U.S. gains, while AI-driven search enhancements attracted 75 million weekly users. Ad revenue jumped 74% to $549 million, reflecting improved targeting capabilities and a competitive edge in digital advertising.

Analysts remain divided on valuation risks despite Reddit’s strong cash flow and gross margin of over 90%. Jefferies upgraded the stock to “buy,” citing fixed cost leverage and EBITDA growth potential, while New Street Research emphasized the need for sustained logged-in user growth to justify elevated multiples. Share dilution—7.9% in the past year—has tempered EPS growth, complicating long-term stock performance. With fourth-quarter revenue guidance at $655–665 million, Reddit’s ability to balance innovation with cost discipline will be critical as it aims for $3.8 billion in revenue by 2028.