Key Takeaways
- Reddit shares fell 5% on Monday as worries about slowing growth weighed on the stock ahead of its third-quarter report on Oct. 29.
- The fourth-quarter outlook matters more than the third-quarter beat, because it shows whether growth is slowing as gradually as analysts expect.
- At 16x forward earnings, Reddit trades at the bottom of its one-year range, though analysts have raised their 2027 earnings estimate by 25% since the end of 2025.
- Watch for a fourth-quarter revenue guide of about $1.05 billion and for U.S. daily users above the second quarter’s 53.2 million.
Reddit (RDDT) fell 5% on Monday as worries about slowing growth hung over its third-quarter report, due after the close on Thursday, Oct. 29. Snap fell 3% the same day and Meta barely moved, so the selling hit Reddit’s own growth story hardest.
Reddit has beaten the top of its own revenue guidance by $58 million to $80 million in each of the last three quarters. Another third-quarter beat wouldn’t surprise anyone. The fourth-quarter outlook is the number that decides whether the stock’s multiple holds.
The slowdown is already in the guidance
When Reddit reported in July, it guided third-quarter revenue to $860 million to $870 million, up 47% to 49%. That’s a step down from the second quarter, when revenue grew 61% to $805 million.
It also stopped reporting U.S. logged-in daily users as a separate number, after that figure grew just 1% in the second quarter, to 23.1 million.
Analysts expect the slowdown to keep going. Consensus calls for revenue of $3.39 billion in 2026, up 54% from 2025’s $2.2 billion, then $4.47 billion in 2027 (up 32%) and $5.58 billion in 2028 (up 25%).
To hit that 2026 figure, Reddit needs fourth-quarter revenue of roughly $1.05 billion to $1.06 billion, up about 45% from last year’s $726 million. A guide in that range keeps the analysts’ path intact. A guide below it would push analysts to cut their numbers, unless investors trust Reddit to beat its guide again the way it has all year.
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The multiple already prices in a steeper slowdown
Even after Monday’s drop, Reddit trades at 16x forward earnings. That’s the lowest point of the past year, against an average of 26x and a high of 49x in mid-January.
It’s also lower than at any quarter-end since the March 2024 listing. And analysts have raised their 2027 earnings estimate 25% since the end of 2025, from $7.75 a share to $9.69. (That figure is the normalized estimate, which only seven analysts make. On GAAP estimates, earnings are lower and the multiple is higher.)
So the market is betting that growth slows faster than the analysts’ numbers say.
Margins could steal the show
Profit is the other way Thursday could go well. Reddit’s EBITDA margin swung from a 42% loss in 2024 to a 21% profit in 2025.
(The 2024 loss was swollen by $802 million of stock pay in its IPO year.)
The margin has kept climbing. The adjusted EBITDA margin reached 42.6% in the second quarter, up from 33.4% a year earlier. The third-quarter guide of $385 million to $395 million of adjusted EBITDA works out to about 45% at the midpoint, and management’s long-term goal is 50%.
But a strong quarter hasn’t always been enough. The stock fell about 10% after hours on July 30 after a second quarter that beat, with management calling search referrals “choppy” on Reddit’s second-quarter call.
What Thursday has to show
- A fourth-quarter revenue guide of about $1.05 billion to $1.06 billion, the level the full-year consensus implies.
- U.S. daily users above the second quarter’s 53.2 million, in the first report without the logged-in split.
- Ad impression growth holding near the second quarter’s 17%, a quarter in which ad prices rose about 40%.
My take: at 16x, the price already assumes a sharper slowdown than analysts model. A fourth-quarter guide pointing to growth in the mid-40s should be enough for the multiple to hold, and probably to expand from here.
Of course, the U.S. user count is the risk. If it slips below 53.2 million, a strong guide may not save the multiple.
So what is Reddit stock actually worth?
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!
