Reddit RDDT is benefiting from the growing adoption of its AI tools, which are playing a pivotal role in driving top-line growth. In the fourth quarter of 2025, the company reported revenues of $725.6 million. The reported figure surged 69.7% year over year.
The company is also benefiting from its investment in AI-powered tools, which are increasing user engagement and advertising revenues. In the fourth quarter of 2025, Reddit reported 121 million daily active users, reflecting a 19% year-over-year increase, and 471 million weekly active users, marking 24% year-over-year growth.
The company has integrated AI-powered features, such as Reddit Answers, into its platform to enhance user experience and engagement. In the fourth quarter of 2025, Weekly search activity on Reddit increased significantly, with more than 80 million people searching directly on the platform, up from 60 million a year ago. Reddit Answers, the AI-powered search feature, saw growth in queries, increasing from 1 million to 15 million over the year.
RDDT’s expanding portfolio has been noteworthy. In February 2026, Reddit launched a test AI-powered search feature. This tool turns community discussions into shopping experiences. It shows product carousels that include pricing, images and purchase links. The feature highlights items suggested in real user conversations, combining genuine opinions with easy product discovery.
RDDT’s robust AI portfolio and rising user engagements are expected to drive the company’s top-line growth. For the first quarter of 2026, RDDT expects revenues between $595 million and $605 million, representing 52% to 54% year-over-year revenue growth with a midpoint of about 53%.
RDDT Faces Stiff Competition
RDDT is facing stiff competition from competitors like Pinterest PINS and Snap SNAP, which are also expanding into advertising to compete in the rapidly growing digital ad market.
Snap’s expanding portfolio has been noteworthy. In the fourth quarter of 2025, Snap reported that more than 700 million users used its Gen AI Lenses over 17 billion times, highlighting the surging demand for AI-powered creative tools on its platform.
Pinterest’s AI investments are playing an important role in enhancing user experiences and driving top-line growth. In the fourth quarter of 2025, Pinterest’s AI-powered visual search capabilities continued to show strong performance, with 80 billion monthly searches, the majority of which were visual in nature.
RDDT’s Share Price Performance, Valuation, and Estimates
RDDT shares have plunged 47.4% in the trailing six-month period, underperforming the broader Zacks Computer & Technology sector and the Internet - Software industry’s decline of 2.4% and 26.2%, respectively.
RDDT Stock Performance
Image Source: Zacks Investment Research
RDDT shares are overvalued, with a forward 12-month Price/Sales of 7.15X compared with the Computer & Technology sector’s 5.86X. RDDT has a Value Score of D.
RDDT Valuation
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for 2026 earnings is pegged at $4.02 per share, which has increased 2.29% over the past 30 days. This suggests 53.44% year-over-year growth.
Reddit Inc. Price and Consensus
Reddit Inc. price-consensus-chart | Reddit Inc. Quote
RDDT currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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This article originally published on Zacks Investment Research (zacks.com).