Reddit (RDDT) investors need to buckle up for an important event. The social media company will report its second-quarter earnings after the market closes on July 30, and the results could determine where RDDT stock heads next.
The timing couldn't be more important. Reddit is coming off another strong quarter in which it easily beat Wall Street's expectations. In the first quarter, revenue climbed 69% year-over-year (YOY) to $663 million, comfortably ahead of analyst estimates. Adjusted EPS came in at $1.01, crushing consensus estimates of $0.62. The company also generated more than $300 million in free cash flow and finished the quarter with $2.8 billion in cash.
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Despite those impressive results, Reddit stock has struggled in 2026. Shares are down roughly 22% year-to-date (YTD) after concerns over artificial intelligence (AI) spending, rich valuations, and uncertainty surrounding the company's Alphabet (GOOGL) content licensing agreement weighed on sentiment. Investors now want to know whether Reddit can deliver another earnings beat and provide more clarity on its AI strategy.
www.barchart.com Reddit's AI Business Is Becoming a Bigger Story
Reddit has evolved well beyond a traditional social media platform. The firm's biggest competitive advantage is its massive collection of authentic conversations created by millions of users across more than 100,000 communities. These discussions have become increasingly valuable as AI companies search for high-quality training data.
That opportunity has already produced meaningful licensing revenue. However, investors are closely watching negotiations with Google over the renewal of Reddit's AI data agreement.
Reports suggesting the current agreement may not be renewed triggered a sharp selloff, with Reddit shares falling 8% on July 22. While losing the deal would remove an important revenue source, management appears to be pursuing a more attractive pricing model based on actual AI usage rather than fixed annual payments.
If Reddit succeeds, its AI licensing business could become significantly more valuable over time.
Another Strong Quarter Could Justify Reddit's Premium Valuation
Unlike many social media companies, Reddit still trades like a high-growth tech stock. Shares of RDDT stock currently trade at roughly 48.2 times trailing earnings and about 34.8 times forward earnings. By comparison, Meta Platforms (META) trades at approximately 19 times trailing earnings.
Those valuation multiples leave little room for disappointment. Wall Street expects Q2 revenue of approximately $731 million to $733 million, representing growth of roughly 46% to 47% from a year ago. Adjusted earnings are expected to come in at $0.99 per share, although some analysts expect an even stronger result.
Reddit has exceeded earnings expectations in each of the past eight quarters, giving investors confidence that another beat remains possible. Still, expectations are high, and the options market is pricing in roughly a 12% move following the earnings release.
What Does Wall Street Expect for RDDT Stock?
Analysts remain largely optimistic heading into the earnings report. Reddit stock carries a consensus “Moderate Buy” rating from 30 analysts with an average price target of $223.71, implying roughly 25% potential upside from current levels.
Needham recently reiterated a “Buy” rating on RDDT stock with a $300 price target, citing Reddit's unmatched collection of human-generated content and long-term AI monetization opportunity. Wedbush also initiated coverage with an “Overweight” rating and a $250 target, highlighting Reddit's expanding advertising business and growing AI revenue potential.
Jefferies continues to rate the stock as a “Buy” with a $250 target, expecting another strong quarter driven by advertising growth and market-share gains. This month, D.A. Davidson maintained its “Buy” rating with a $200 target, while Bernstein remains more cautious with a “Hold” rating and $190 price target.
Overall, Wall Street continues to see meaningful upside, even as investors wait for greater clarity around the Google licensing negotiations.
www.barchart.com The Bottom Line
July 30 could be one of Reddit's biggest days of 2026. If the company delivers another strong earnings beat while providing positive commentary on its AI licensing strategy, investor confidence could quickly return. But if growth slows or management disappoints on guidance, RDDT stock could remain under pressure.
For investors, July 30 will offer the clearest look yet at whether Reddit's AI-driven growth story is still on track.
On the date of publication, Nauman Khan did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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