Reddit (RDDT) experienced a significant drop in its share value, plummeting 41.4% year-to-date, notably worse than the Zacks Computer & Technology sector’s decline of 7.5%. The Zacks Internet – Software industry saw a drop of 18.5% in the same period. The company’s declining performance is attributed to a tough macroeconomic backdrop and growing competition from peers such as Meta Platforms (META) and Alphabet (GOOGL).
Despite these challenges, Reddit reported promising metrics, including a 42% year-over-year increase in Average Revenue Per User (ARPU) to $5.98 in Q4 2025, and a 75% rise in advertising revenue to $690 million. The platform boasts 121 million daily active users, a 19% increase from the previous year, bolstered by the introduction of new AI-powered advertising and engagement tools.
For Q1 2026, Reddit anticipates revenues between $595 million and $605 million, surpassing the Zacks Consensus Estimate of $614.09 million. The projected earnings per share stand at 62 cents, representing a dramatic year-over-year growth of 376.92%. However, a challenging macroeconomic environment and intensifying competition pose ongoing risks for the company.
