Economy

Reddit Shares Increase After Company Reports Strong Q3 Results and Outlook

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Oct 31, 2025

THE BARE STORY

Reddit's stock value rose by more than 12% on Friday after the social media company reported third-quarter financial results and a fourth-quarter sales forecast that surpassed analyst estimates. The company’s revenue for the quarter reached $585 million, a 68% increase from the prior year, exceeding an estimate of $546 million. Earnings per share were reported at 80 cents, which was higher than an estimated 51 cents.

For the upcoming fourth quarter, Reddit projected sales to be between $655 million and $665 million, which is above a Wall Street forecast of $638 million. The company reported that its daily active users increased by 19% year-over-year to 116 million, while the number of global logged-in users grew by 14% to 50.2 million. However, growth in daily active unique users slowed to 7% in the third quarter, down from 12% in the second quarter. Reddit has expressed concerns that AI applications could negatively impact new user growth.

According to the company, advertising was a significant factor, with nine of its top 15 advertiser verticals growing by more than 50%. An analyst from Morgan Stanley, Brian Nowak, reportedly stated that the results show progress in the company’s advertising strategies and that investments in automation are improving returns.

Reddit’s other revenues, which include data licensing partnerships with companies such as Google and OpenAI, grew by 7% year-over-year to $36 million. In an earnings call, CEO Steve Huffman said that while these partnerships are not currently major drivers of traffic, he sees a significant opportunity for future collaboration.

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• A key metric for user acquisition is showing a significant slowdown. While some user metrics grew, the growth in daily active unique users slowed to 7% in the third quarter. This represents a marked decrease from the 12% growth rate reported in the second quarter, suggesting a potential deceleration in attracting new people to the platform.

• The company has expressed concerns about future threats to user growth. According to the article, Reddit itself has identified potential risks that could hinder its expansion. The company is concerned that the rise of AI applications could negatively impact its ability to attract new users in the future.

• Highly publicized data partnerships are not yet a major revenue source. The "other revenues" category, which includes data licensing partnerships with companies like Google and OpenAI, grew to $36 million. While the CEO sees this as a future opportunity, he noted that these deals are not currently major drivers of traffic, and their revenue represents a small portion of the company's total earnings.

How it may affect me

As a U.S. reader:

• Investors holding Reddit stock saw its value increase by over 12%, which could directly affect personal investment portfolios and some retirement fund balances.

• As advertising is a major revenue source, users may see changes in the volume or targeting of ads on the platform.

• Reddit is licensing user data to AI companies like Google and OpenAI, which may result in user-generated content appearing in AI-powered search or chatbot answers.

• A slowdown in new user growth could, in the long term, potentially impact the diversity of content and communities on the platform for all users.

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