Reddit Stock Price (NYSE:RDDT) Climbs to $225 on AI Monetization and Global Expansion

NYSE:RDDT Expands AI Monetization and Global Reach While Valuation Premium Persists

Reddit Stock Pushes Toward the Upper End of Its Range

Reddit, Inc. (NYSE:RDDT) closed at $225.08, off just 0.20% on Friday, consolidating near the upper band of its 52-week range between $55.25 and $253.14. The company now commands a market capitalization of $42.1 billion, more than tripling from last year as investors priced in surging revenue growth, global adoption, and a series of AI licensing deals that strengthened the company’s monetization profile. RDDT has delivered a 275% gain over the past twelve months, compared with a 15% increase for the S&P 500.

Financial Performance Highlights Solid Inflection Point

Reddit’s trailing twelve-month revenue reached $1.67 billion, up 77.7% YoY, while net income swung to $216.3 million after a $484 million loss the prior year. Diluted EPS hit $2.23, putting its trailing P/E at 100.9x, while forward P/E projections stretch toward 125x. Gross profit margins stood at 91% with operating margins improving to 13.6%. Operating cash flow surged to $400.5 million and free cash flow hit $290.6 million, evidence of a capital-light model. With $2.06 billion in cash and just $25 million in debt, Reddit’s balance sheet provides both defensive stability and offensive firepower for acquisitions.

User Growth and International Expansion Lift Engagement Metrics

Daily active users surged 21% YoY to 110.4 million in Q2 2025. Half of Reddit’s traffic now comes from outside the U.S., though only 17% of revenue is international, highlighting significant upside. Machine translation into 23 languages is unlocking previously under-monetized regions like Brazil, India, and the Philippines, where Reddit already reaches over 10% of the internet population. Global expansion drove a 71% YoY increase in revenue from overseas markets, while Reddit Answers, its AI-driven summarization feature, boosted engagement by 32%. Average revenue per user climbed from $1.44 in 2024 to $2.04 in 2025, pointing to accelerating monetization efficiency.

AI Licensing and Data Monetization Create High-Margin Revenue Streams

Reddit secured a $60 million licensing deal with Alphabet and a $70 million agreement with OpenAI, embedding Reddit’s content into Google AI overviews and ChatGPT recommendations. These arrangements elevated Reddit to the second-most cited platform by AI engines after Quora. Management has hinted at additional partnerships, which could scale data licensing into a $300 million annual recurring revenue stream within three years. With SaaS-like margins near 80%, this business line could command premium multiples similar to Palantir or other data-as-a-service peers.

Advertising Platform Nears Escape Velocity

Advertising remains the core driver. In Q2 2025, revenue growth of 78% far outpaced the 21% DAU increase, proof that ARPU expansion is accelerating. Reddit’s $24 global ARPU still trails Meta’s $40+ and Pinterest’s $30 range, but the trajectory suggests convergence. Management’s direct-response ad improvements, combined with AI-driven targeting, have attracted higher-quality advertisers. Free cash flow in Q2 reached $111 million versus $27 million a year earlier, with capex at just $0.5 million—demonstrating remarkable efficiency.

Valuation Metrics and Analyst Targets for NYSE:RDDT

At a price-to-sales multiple of 24.2x, RDDT trades at a steep premium compared with peers Pinterest at 6.1x and Baidu at 1.7x. Yet the revenue trajectory—up nearly 70% YoY—justifies the multiple for now. Sell-side analysts remain split. Piper Sandler, Needham, and Raymond James maintain bullish targets between $210 and $230, while Morgan Stanley has an overweight call at $230. The average one-year target sits at $197.31, reflecting skepticism about sustaining growth, but Golden Bear Capital and First Principles Partners argue upside toward $250–$320 is realistic as monetization scales.

Insider and Institutional Activity in RDDT

Institutional investors control 88.2% of Reddit shares, while insiders hold 4.65%. Insider transactions show profit-taking after the parabolic rally, but short interest sits at 18.1% of float, reflecting ongoing debate about valuation sustainability. The stock’s volatility has made it a battleground name, with hedge funds rotating aggressively in and out of positions as quarterly results surprise to the upside.

Forward Outlook and Growth Projections

Consensus calls for Q3 2025 revenue of $543 million and Q4 at $628 million, bringing the 2025 total to $2.07 billion (+64% YoY). Earnings are projected at $1.87 for FY25, climbing to $3.08 in FY26, implying 25–30% CAGR in profitability. By FY26, revenue is expected to reach $2.74 billion, with some bullish projections pushing toward $2.81 billion. If ARPU approaches $30 and DAUs scale above 125 million, advertising revenue alone could justify valuations north of $50 billion enterprise value, with AI licensing providing incremental upside.

Investment Stance on Reddit Stock

RDDT trades at one of the richest valuations in the digital ad sector, but the combination of user growth, international expansion, and high-margin AI licensing gives it a rare mix of growth catalysts. The market continues to discount execution risk and competitive threats from X’s Grok and TikTok’s AI features, but current fundamentals show a capital-light model translating directly into cash flow. Based on the data, Reddit remains in the Buy camp, with near-term targets around $250 and long-term potential extending toward $320 if AI licensing and ARPU expansion meet expectations.

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