"Reddit's stock has nearly doubled since suffering a severe dip in April, bringing the stock's 12-month gain to 25%. The recovery was driven by the company's strong growth in advertising revenue and daily active users. Those signs of strong ad revenue growth are also a big reason the stock is a compelling buy heading into 2026. Reddit is building a trusted brand that people are turning to for answers on various topics, which could benefit the stock over the long term."
"Advertising drives over 90% of Reddit's total revenue. Ad revenue surged 74% year over year in the third quarter, driven by the strength in the number of ads shown on the platform and higher ad pricing. This signals tremendous demand from brands to reach 116 million daily active users on Reddit's platform. This growth also reflects how individuals are using Reddit. It's a platform that offers excellent value for shoppers seeking product reviews from other users."
Analysts expect Reddit's free cash flow to soar over the next four years. Reddit's stock nearly doubled since a severe April dip, producing a 12-month gain of 25%. Recovery was driven by strong growth in advertising revenue and daily active users. Advertising accounts for over 90% of revenue, with ad revenue up 74% year over year in Q3 driven by more ads shown and higher pricing. The platform reaches 116 million daily active users and receives over 75 million weekly searches. Reddit attracts high-purchase-intent shoppers through user product reviews and continues investing in engagement features that generate high advertiser ROI. PwC projects global advertising growth to outpace consumer spending through 2029.
Read at The Motley Fool
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