Reddit Benefits From Strong User Growth: A Sign for More Upside?

Reddit RDDT is benefiting from strong user growth, which signals potential for further upside in its business performance and market position. In the second quarter of 2025, Reddit reported a 21% year-over-year increase in daily active users, reaching 110 million globally. This growth is driven by strategic product enhancements, targeted marketing initiatives and international expansion.Reddit’s focus on search functionality is also playing a significant role in user growth. The platform’s core search product now boasts 70 million weekly users, while Reddit Answers, its AI-powered search tool, has grown to 6 million users in the second quarter of 2025, up from 1 million in the first quarter.  By integrating search more deeply into the user experience and making it a key feature, Reddit is positioning itself as a true search destination, catering to both scrollers and seekers.International expansion further contributed to user growth.  With machine translation now available in 23 languages, Reddit is unlocking access to millions of users across Asia, Europe, and Latin America.  Localization efforts, combined with focused marketing campaigns like the brand initiative in France, are helping Reddit attract and retain users in non-English-speaking markets.Expanding portfolio has been noteworthy. In June 2025, Reddit rolled out new profile customization features, allowing users to curate their profiles via a “Content and activity” setting, choose visibility of posts and comments on a subreddit-by-subreddit basis, hide NSFW content and follower counts, and view a refreshed activity summary, all accessible under a unified “Curate your profile” section.RDDT Faces Stiff CompetitionRDDT is facing stiff competition from competitors like Pinterest PINS and Snap SNAP, which are also expanding into advertising to compete in the rapidly growing digital ad market.Pinterest is benefiting from solid user engagement across all regions. In the second quarter of 2025, Pinterest witnessed 11% year-over-year growth in global monthly active users to 578 million, which is an all-time record.Snapchat continues to evolve as a visual-first social media platform with strong traction among Gen Z users. In the second quarter of 2025, Snapchat’s global community reached 469 million daily active users (DAU), up 8.6% year over year. Snapchat added 9 million DAU on a quarter-over-quarter basis.RDDT’s Share Price Performance, Valuation, and EstimatesRDDT’s shares have gained 22.9% year to date, outperforming the broader Zacks Computer & Technology sector’s return of 21.6% and the Internet - Software industry’s appreciation of 17.1%.RDDT Stock's PerformanceImage Source: Zacks Investment ResearchRDDT shares are overvalued, with a forward 12-month Price/Sales of 14.36X compared with the Computer & Technology sector’s 6.83X. RDDT has a Value Score of F.Price/Sales (F12M)Image Source: Zacks Investment ResearchThe consensus mark for 2025 earnings is pegged at $1.87 per share, which has increased by a penny in the past 30 days. This suggests 156.16% year-over-year growth.Reddit Inc. Price and Consensus Reddit Inc. price-consensus-chart | Reddit Inc. QuoteRDDT currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.Free Report: Profiting from the 2nd Wave of AI ExplosionThe next phase of the AI explosion is poised to create significant wealth for investors, especially those who get in early. It will add literally trillion of dollars to the economy and revolutionize nearly every part of our lives.Investors who bought shares like Nvidia at the right time have had a shot at huge gains.But the rocket ride in the "first wave" of AI stocks may soon come to an end. The sharp upward trajectory of these stocks will begin to level off, leaving exponential growth to a new wave of cutting-edge companies.Zacks' AI Boom 2.0: The Second Wave report reveals 4 under-the-radar companies that may soon be shining stars of AI’s next leap forward.Access AI Boom 2.0 now, absolutely free >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Snap Inc. (SNAP): Free Stock Analysis Report Pinterest, Inc. (PINS): Free Stock Analysis Report Reddit Inc. (RDDT): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks