Reddit Stock Blows the Doors Off - Can it Last?

Reddit’s stock has surged 62% in one month, easily placing the company’s earnings report as one of the best to come out of the tech sector this quarter. The world’s leading forum site has only 416 million weekly active users compared to Facebook’s 2 billion yet ranks fifth behind Facebook as the most visited site in the United States. In addition, due to a few changes in how Google surfaces content with AI overviews, Reddit is now the second most visible site in the United States – ranking above Facebook for example - and the top line results show the company is reaping the rewards of being in the search giant’s good favor.  

Therein lies the risk, which is that Reddit’s current growth is dependent upon how a Big Tech company graciously offers visibility on its platform – something that is entirely outside of Reddit’s control. The partnership could continue for years, or it could stop at any time. 

Below, we offer a few ways to approach the opportunity that Reddit presents and what an investor should look for to determine if Reddit will continue to be an anomaly in that AI-driven search benefits the social platform (whereas it hurts traffic for most other publishers). The analysis also discusses what to watch for in terms of Reddit hitting peak growth and the catalysts that could drive the stock further.

Reddit stock surges 62% in the weeks following the Q2 2025 earnings report. Source: YCharts 

Reddit’s Web Rankings are Surging; Driving Stock Returns 

Reddit delivered a rather impressive Q2 on July 31st with revenue beating estimates by more than 17%. Growth translated to the bottom line as GAAP net margin expanded to 18%. Driving much of these results is the new improved web rankings that Reddit has seen over the past year due to Google’s AI Overviews. 

Over the last two years, Reddit has seen an explosion in SEO visibility on Google, with data from Sistrix placing growth from July 2023 to April 2024 at a whopping 1,328%. This moved Reddit from 85th most visible site to the 7th most visible.  

Now, as of August 2025, Reddit has moved to 2nd most visible site in the US, per Sistrix, behind Wikipedia, and ahead of popular sites such as Facebook in 7th, Amazon in 4th, and YouTube in 3rd. This major improvement in SEO ranking may be a potential contributor to Reddit’s accelerating growth over the past five quarters – yet as stated, the surge in growth is out of Reddit’s control and relies on Google SEO placement, which could change at anytime. 

In terms of user engagement, Reddit notched 4 billion visits as of July 2025, according to data from Similarweb, compared to 12.1 billion for Facebook, 6.6 billion for Instagram, and 4.5 billion for X. Users visited an average of 4.83 pages per visit with an average visit duration of 6 minutes, compared to 12.57 pages per visit and an average duration of more than 10 minutes for Facebook. Similarweb places Reddit as the fifth-most visited site in the US, behind Facebook in fourth place. 

Advertising Revenue Rises 84% YoY 

Behind the substantial revenue beat in Q2 was 84% growth in advertising revenue to $465 million. This marked a sharp 23 point acceleration from 61% growth in Q1. Sequentially, advertising revenue grew almost 30%, with growth of more $106 million QoQ, outpacing Q4 2024’s $79 million sequential increase. This is impressive considering Q4 is typically the strongest seasonally for the company.  

Reddit’s stock price surges after reporting advertising growth of 84% YoY 

Reddit said that the majority of this advertising growth was driven by existing advertisers deepening investments on the platform, though it did see 50% YoY growth in active advertisers as it continued to acquire new advertisers. Additionally, performance ads and brand ads both increased more than 80% YoY, reflecting strong engagement from advertisers on the platform.  

Reddit also highlighted ways it is driving higher return on ad spend for advertisers and higher click-through rates, both key factors in increasing ad spend to maintain a robust ad revenue flywheel. Management said that Dynamic Product Ads for shopping were made generally available in Q2, and advertisers were consistently achieving 2x higher ROAS on average versus standard campaigns. Reddit also said that Conversation Summary Add-Ons, which integrate positive user conversations directly into product or brand ads, were delivering more than 10% higher click-through rates versus standard image ads. 

Reddit Monetizes through Ads, yet is Expanding its Monetization Methods 

Similar to most large audiences online, Reddit monetizes through ads. While ads are its main revenue stream, the company has recently branched out into premium subscriptions and data licensing deals.  

Reddit’s recent product updates target all three of its stated growth levers: core product, search and international growth. 

In core product, Reddit is working to boost engagement and platform stickiness by lowering barriers to log-in, using AI to improve personalization of homescreens and community discovery, and improve user onboarding. Bringing more logged-in users to the platform is especially important considering logged-in users contribute a higher ARPU than logged-out, yet this cohort accounts for under 45% of daily active unique users (DAUq).  

Reddit Search is another product feature that now has 70 million weekly active unique users (WAUq) as of Q2, or a nearly 17% attach rate to its global WAUq of 416.4 million. Within this is Reddit’s AI-powered search engine Reddit Answers, which saw WAUq rise 500% sequentially in Q2, from 1 million to 6 million, or nearly 10% attach of Search users.   

Answers are separate from Search in Q1, although Reddit is now working to unify the two centrally in the same search-box, assisting in queries from new users, existing users, and users routed to Reddit via external search engines.  

Query growth has been very strong, with Reddit noting that average query volume rose more than 10X sequentially from Q1 to Q2.  

Reddit Seeks International Expansion: Double-edge sword 

Global expansion for Answers is continuing, with the feature only available to US users and some international markets including the UK, India, Australia and Canada. While International user growth is outpacing US growth by a large degree, Reddit expanded the rollout of its AI-powered automatic Machine Translation feature from 13 languages in Q1 to 23 in Q2.  

Available across 35+ countries worldwide, Machine Translation removes barriers between users in different geographies, by allowing them to “post and comment in their preferred language, which will be auto-translated into the community’s native language.”  

For example, Reddit says that users in Spain who typically use Reddit in Spanish could seamlessly contribute to French communities and threads. By lowering barriers to communicate between different geographies and languages, Reddit is opening the door to further expand its 235 million international user base (for comparison, Meta’s international active users are 11x higher). 

This is a double-edged sword, however, as the United States region presents a hidden risk and could create a headwind to growth as user growth stalls, considering the region contributes the bulk of revenue. 

Reddit’s WAUq Shows Stronger International Growth, US Plateau 

International weekly active unique users (WAUq) growth remains quite strong, with Q2 being its sixth consecutive quarter of >30% growth. Meanawhile, United States WAUq is plateauing, with growth decelerating 60 points over the past year and 10 points in the past quarter to just 8% in Q2.

• Global WAUq rose 22% YoY and 4% QoQ to 416.4 million. 
• US WAUq rose just 8% YoY and 1.5% QoQ to 181 million. In terms of user additions, YoY growth was just 13.5 million.  
• International WAUq rose 35% YoY and nearly 6% QoQ to 235.4 million, or user additions of more than 60 million YoY.  

Why Slowing United States User Growth is not Ideal 

The plateau in US WAUq with minimal growth since Q3 2024 raises the risk that Reddit’s US penetration is approaching a peak and already maturing. With estimated US internet users of 322 million, Reddit’s penetration would be around 56%, versus Meta at 84% with 272 million MAUs in the US as of Q4 2023.  

Should Reddit find it difficult to boost its US penetration towards 200 million and above, or if US user growth does plateau here, future revenue gains will hinge on two key monetization drivers: impressions growth or ARPU growth.  

Driving impressions growth higher would rely on increasing ad loads either via higher platform engagement or content consumption (higher time spent or pages visited), or greater ad density. Ad density is a rather fine line to walk without oversaturating the platform with ads to the detriment of the user experience. ARPU growth would stem from improving ad pricing from better targeting or higher-value, higher-converting formats (increasing ROAS for advertisers), which Reddit is currently working on. 

This also ties into international growth – International monetizes at just over one-fifth the rate of US, yet now accounts for almost 57% of WAUq, up from 51% a year ago. If US plateaus and International continues to grow much quicker, say at >20% YoY, this presents a real headwind to global ARPU since the region monetizes at a much lower rate yet accounts for an increasingly larger share of users. 

The One Metric that Reddit Investors Should Watch Closely 

Reddit was the worst YTD performer against peers in June when fears were rising around traffic hits from Google’s AI Overviews, with shares down more than (30%) YTD. Barely two months later, shares have doubled, now making Reddit the best performer with its YTD return of 37%. 

We believe one key metric – above all other numbers – will help determine if Reddit can sustain darling status in 2025 and beyond. Given the meteoric rise this past month with Reddit’s stock seeing gains of 62% in one month, the information below is not to be missed. 

Sign up below to access the following information: 

• The one key metric that provides an important hint as to whether Reddit can sustain its stock trajectory. 
• Breaking down in granular detail why The Street is buying the stock; information we haven’t touched on yet in this analysis 
• Why top line growth is important but may not be what ultimately drives the stock’s performance – and what will drive the stock further instead