Reddit Stock Rises After Wall Street Praises AI-Powered Ad Strategy: How Is Its User Base Doing?

Reddit's latest earnings report has electrified Wall Street. The social media platform's shares leapt more than 14% after it unveiled a 78% year-on-year revenue surge to roughly $500 million (£378.22 million) and earnings per share of $0.45 (£0.34)—more than double analyst forecasts. This exceptional performance, powered by AI-driven advertising and strong user growth, prompted multiple analyst upgrades and renewed confidence in Reddit's long-term potential.

Stocks' Leaping Roughly'

Reddit's stock leapt roughly 15–20% in after-hours trading after the company beat expectations with Q2 revenue, well ahead of the $0.19 (£0.14) consensus forecast.

Analysts reacted favorably: Morgan Stanley raised its price target to $230 [£173.98] (Overweight), Raymond James lifted its target to $175 [£132.38] (Strong Buy), Needham and Citi reaffirmed Buy ratings at $165 (£124.81) and $163 (£123.30) respectively, while BofA bumped its target to $180 (£136.16) but kept a Neutral stance.

A consensus among ~26 analysts remains Moderate Buy, with price targets ranging from $125 (£94.55) to $230 (£173.98)—implying room for further gains as Reddit scales its ad revenue and AI-driven search features.

More on Reddit's Q2 Results

Reddit delivered a standout Q2, with revenue soaring 78% year-over-year, surpassing Wall Street's expectations of around $426 million (£322.24 million). GAAP EPS reached $0.45 (£0.34), compared to a loss of $0.06 (£0.045) in the prior year and well above the consensus of $0.19 (£0.14).

Advertising revenue rose 84% to $465 million (£351.74 million), while daily active users grew 21% to 110.4 million, driven by international expansion and AI-powered search capabilities, with weekly usage reaching 70 million queries.

Meanwhile, Reddit's other revenue streams increased 24% year-over-year to $35 million (£26.48 million).

Convergence of AI and Advertising

Reddit is doubling down on AI‑powered advertising, integrating its unique community-engine data into tools like Reddit Insights and Conversation Summary Add‑ons—both part of its new Community Intelligence suite that turns user discussions into actionable brand content.

Advertisers have seen click-through rates 10–15% higher, while early testing suggests reduced ad concept research time and deeper brand engagement.

Paired with previous investments such as acquiring Memorable AI in 2024, Reddit is positioning itself as a tech-savvy ad-tech platform that delivers creative optimisation and high-intent targeting, cementing AI as a core revenue driver.

Updates on Reddit's User Base

Reddit now boasts 110.4 million daily active unique users (DAUs) in Q2 2025, marking 21% year‑over‑year growth, slightly above the ~109 million analysts had expected. International DAUs grew ~32% to about 60.1 million, while US growth was ~11% to 50.3 million.

Weekly active users total approximately 365 million, indicating strong, broader engagement. With over 500 million Reddit accounts globally, the platform's logged-out user segment continues to expand, reflecting Reddit's increasing reach through search referrals and building momentum across new demographics.

Leveraging Human-Created Content for Growth

In its latest earnings call, CEO Steve Huffman underscored Reddit's strategic edge in the age of artificial intelligence, asserting that authentic, human dialogue is growing in value, not being displaced. 'AI isn't replacing human conversation; it's elevating its importance,' he noted.

He further described Reddit's current position as a rare market inflexion point, calling it 'a once-in-a-generation opportunity.' These remarks reflect Reddit's intent to harness its rich, user-driven content as a foundational asset for future expansion and AI-enhanced innovation.

'Reddit is built for this moment. In a world where connection is increasingly rare, our communities demonstrate the value of human conversation and knowledge. We're focused on growing globally, scaling sustainably, and making Reddit the most trusted place on the internet,' he said.

Reddit's Q2 results mark a turning point for the company, showcasing rapid growth in revenue, profitability, and user engagement. With AI at its core and a growing global user base, Reddit is positioning itself as a distinctive player in both technology and media.