Reddit released its Q1 2025 financial results after the market closed on Thursday, May 1st—and the stock immediately soared in after-hours trading. As someone who’s had Reddit rated as a Buy throughout 2025, this surge comes as no surprise. The company is firing on all cylinders, and this quarter’s performance confirms the strength of both its business model and its long-term growth trajectory.
So far this year, I’ve rated Meta Platforms, Reddit, and Snap as buys. Two of the three—Meta and Reddit—delivered excellent earnings reports and were rewarded with stock price gains. Snap, on the other hand, reported disappointing results, and its stock declined accordingly. While I’ve maintained a buy rating on all three based on long-term fundamentals, it’s clear that Reddit is distinguishing itself among social media peers with outstanding execution.
In this report, I’ll break down Reddit’s Q1 numbers, highlight key business drivers, and update my investment thesis. The bottom line? I’m reaffirming my buy rating and remain confident in Reddit’s potential to outperform.
Earning Overview
Revenue Growth: In Q1 2025, Reddit reported revenue of $392.4 million, marking a 61% year-over-year increase. This growth outpaces competitors like Meta Platforms and Snap, which reported 16% and 14% increases, respectively.
Profitability: The company achieved a net income of $26.2 million, or $0.13 per share, a significant turnaround from a $575.1 million loss in the same quarter the previous year.
User Growth: Daily active users (DAUs) reached 108.1 million, a 31% year-over-year increase. Notably, U.S. DAUs grew by 21%, while international DAUs surged by 41%.
Fundamental
Reddit's strong revenue growth and user expansion, particularly in international markets, position it as a compelling investment in the social media sector. However, its high valuation metrics indicate that much of this growth is already priced in, and investors should monitor the company's ability to sustain its momentum.
Explosive Growth and Key Metrics
Let’s start with the headline numbers: Reddit reported $392 million in total revenue, representing a 61% year-over-year increase. That is exceptional growth—especially when compared to its peers:
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Meta Platforms: +16% YoY
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Snap: +14% YoY
That means Reddit is growing revenue nearly four times faster than either of its closest social media competitors. The message is clear: Reddit is not just keeping pace—it’s gaining market share at a rapid clip.
What makes this even more impressive is that Reddit is not relying on unsustainable spending to chase growth. The company posted operating cash flow of $128 million, a significant jump from just $32.5 million a year ago. That’s nearly a 4x increase in operating cash flow, reflecting disciplined cost control and efficient monetization.
This is an incredibly important point. High growth is often accompanied by high burn rates in early-stage tech companies. But Reddit is managing to scale while still generating positive, growing cash flows—an encouraging sign for long-term investors.
Strong Outlook Despite Uncertainty
Looking ahead, Reddit issued strong forward guidance for Q2 2025:
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Projected revenue: $420 million
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Projected adjusted EBITDA: $120 million
Both of these represent sequential increases from Q1—roughly +$20 million each—and suggest that Reddit’s momentum is not slowing down.
This guidance also stands in stark contrast to some of its competitors. Snap, for instance, did not issue any formal guidance for Q2, citing macroeconomic volatility. Reddit’s decision to provide a confident forecast speaks volumes about management’s visibility into the business and the continued strength of advertiser demand.
In an uncertain economic environment, the fact that Reddit is not only growing rapidly but also issuing strong, forward-looking projections adds another layer of confidence for shareholders.
User Growth: Focused and Profitable
User growth is critical for any social media platform—but where that growth occurs is equally important.
Reddit now boasts 108 million daily active users (DAUs) globally, up 31% year-over-year. But the more impressive stat is this: Reddit grew its U.S. DAU base from 41.5 million to 50 million, a 21% increase. That’s a gain of 8.5 million high-value users in a single year.
Why is U.S. user growth such a big deal?
Because U.S.-based users are far more valuable to advertisers. Reddit’s average revenue per U.S. user (ARPU) rose 31% year-over-year to $6.21, while ARPU for international users was just $1.34. That’s a nearly 5x difference in monetization efficiency.
This trend is consistent across the entire industry—Meta, Snap, and others all earn significantly more from North American users than those in other regions. But Reddit is currently leading the pack in percentage growth from the U.S., which sets it apart in a saturated space.
Compare this to Snap, which actually reported a decline in U.S. daily active users—from 100 million down to 99 million. Reddit, on the other hand, is capturing market share in the most profitable geography, and that’s a powerful signal to investors.
Valuation: Premium Metrics, Undervalued Stock
Now let’s talk valuation. Based on my discounted cash flow (DCF) analysis, I estimate Reddit’s intrinsic value at $261 per share. That’s more than double the current share price, which hovered around $118–$119 at the time of writing—even after its strong post-earnings surge.
Note: My valuation model updates prices in real time during market hours, so after-hours trading is not reflected in this snapshot. But even if we account for a 10–15% move, the stock remains significantly undervalued.
Of course, some investors may point to Reddit’s forward P/E of 116 and argue that it’s too expensive. But here’s the thing: high multiples are justified when a company delivers high performance.
And Reddit checks every box:
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Explosive revenue growth (61%)
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Massive improvements in operating cash flow
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Strong, focused user growth in the most valuable geography
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Efficient monetization (5x ARPU in U.S. vs. international)
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A long runway in a $1 trillion global ad market
In short, Reddit is a premium company trading at a growth multiple—and it’s earning it.
Analyst Outlook
Analysts have set a 12-month price target range for Reddit between $75.75 and $256.20, with an average target of $165.43. This suggests potential upside, contingent on continued user growth and monetization efforts. The company continues to show strength in U.S. user growth and monetization, and management’s confidence is reflected in their decision to provide forward guidance—unlike some peers.
Final Take
I’ve had Reddit rated as a Buy all year long, and following this Q1 report, I’m not just maintaining that rating—I’m more confident in it than ever.
This is a business with strong fundamentals, accelerating growth, improving profitability, and a clear strategic focus on the most lucrative markets. Despite an already impressive post-earnings rally, I believe Reddit’s stock remains materially undervalued relative to its intrinsic worth.
For long-term, growth-focused investors, Reddit offers a rare blend of premium performance and reasonable valuation. I’m reiterating my Buy recommendation—and I’ll continue to track Reddit’s progress closely as it scales into one of the next-generation digital advertising giants.
Disclaimer: I want to make it clear that I am not a financial advisor, and nothing I say is intended to be a recommendation to buy or sell any financial instrument. Additionally, it's important to remember that there are no guarantees or certainties in trading or investing, and you should never invest money that you can't afford to lose.
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