Reddit’s Stock Price Rockets After 600% Jump: AI Deals, Earnings Boom & Wall Street Buzz
In today’s digital age, stock market stories aren’t just about numbers; they also involve emotions and dreams of the future. When it comes to Reddit’s stock price, this story becomes even more exciting. Reddit, once considered merely a discussion forum, has become a high-growth tech stock for Wall Street. Since its 2024 IPO, Reddit stock has seen a meteoric rally of nearly 600%.
This momentum is due in part to AI deals and partly to the company’s strong financial performance. Let’s delve into how RDDT stock has made such a significant journey and what analysts are predicting for the future.
Current Performance of Reddit’s Stock Price
On September 30, 2025, Reddit (NYSE:RDDT) closed at $229.99. This is down from its all-time high of $283 in mid-September, but the stock is still up approximately 245% in 2025. Growth since the IPO has been even more explosive—over 600%.
Volatility has become a factor in this stock, as its beta is around 2.3, which signals a high-risk, high-reward trend. Sometimes a 10% drop one week, then a double-digit rally the next. But one thing is clear – Reddit’s stock price has yet to disappoint investors.
Financial Results: Earnings Beat Records
Reddit stunned everyone with its Q2 2025 earnings report. The company generated $500M in revenue, a 78% increase over the previous year. Ad revenue alone was $465M, and net income reached $89M. This means that a loss-making company has now become a profit-making machine.
In Q1 2025, the company generated $392M in revenue, with net income of $26.2M. Gross margins are consistently above 90%, indicating strong efficiency in Reddit’s business model. DAUs are over 110 million, and weekly users are over 400M.
More notably, foreign users represent only 17% of revenue but 50% of traffic. This means the growth potential ahead is enormous.
Analyst Outlook: Wall Street’s Sentiment for Reddit Stock
Wall Street’s overall sentiment is bullish on Reddit stock. Data shows 2 Strong Buy, 14 Buy, 9 Hold, and only 1 Sell rating. The average 12-month price target is around $201–202, but some firms like Jefferies and Needham have set targets as high as $300.
Baird had a $240 target in September, and Morgan Stanley has a $230 target with an Overweight rating. Some hedge funds and venture capital firms believe that if monetization remains on track, Reddit stock could reach $250–$320.
Market Sentiment & Valuation Risks
Regarding valuation, Reddit’s price-to-sales ratio is ~24x, significantly higher than peers like Snap and Meta. Its price-to-earnings ratio is also above 200, suggesting a bubble. Short interest is also 16–18%, meaning many investors are shorting it, believing it to be overvalued.
Still, the biggest factor in Reddit’s favor is its AI and data licensing deals. Multi-million dollar contracts with Google and OpenAI have created a new revenue stream. Management says these deals could generate a $300M annual business within the next three years. This could be a consistent SaaS-type revenue source, which will help justify the valuation.
Reddit Stock and the New Era of AI
CEO Steve Huffman said in an earnings call that, “Reddit is built for this moment.” In an AI era where misinformation is a challenge, Reddit communities value authentic and human conversations.
The company has launched AI-driven features like “Reddit Answers,” which boost user engagement and ARPU. ARPU has already jumped 47% YoY to ~$4.53. If this growth continues, Reddit’s ad revenue could reach the level of Meta and Snap.
Competitive Position: Reddit’s Unique Edge
Competition is tough – Reddit is a niche player against Meta, Snap, TikTok, and X (Twitter). But Reddit’s unique edge is its authentic community model. People come to subreddits for real discussions, where engagement is deep.
Ad ARPU is still lower than Meta’s (~$24 vs. $40+), but this gap means there’s plenty of room for further growth. Furthermore, data licensing revenue is becoming a completely new growth engine that other competitors don’t yet possess.
Reddit’s Stock Price: Future Outlook
Analysts believe that if Reddit grows its DAUs to 125M and pushes ARPU to $30, its valuation could surpass $50B+. Reddit’s market cap is already around $43B, and if Q3 and Q4 projections turn out correctly (2025 revenue ~$2.07B), there’s room for further rally.
The general price target is now ~$200, but bulls are taking it up to $300. In the long run, Reddit’s greatest challenge will be explaining its valuation and keeping the competition at bay. But if AI and global expansion plans deliver, investors could still see significant upside.
Conclusion
Once started as just a discussion platform, Reddit has grown into a billion-dollar tech giant. Reddit’s stock price has given investors a roller-coaster ride since its 2024 IPO. Strong earnings, AI deals, and bullish Wall Street commentary have established it as a symbol of growth.
Currently, valuations are high and so is volatility, but for those with a long-term vision, Reddit stock has become a “watch closely” candidate. The story of RDDT has just begun – and the next few years will decide whether this growth is sustainable or just a temporary bubble.
Disclaimer:
The views and recommendations above are those of individual analysts or brokerage companies, not US News Weeks. We advise investors to check with certified experts before making any investment decisions.
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