Shares of Reddit, Inc. (RDDT) surged in Tuesday's afternoon trading session, posting a notable gain that significantly outpaced the broader market indices. The stock climbed approximately 5.4% to reach $149.38, after trading in a range between $141.21 and $152.34 during the day. This upward movement occurred against a backdrop of relative stagnation for major market benchmarks, with the SPDR S&P 500 ETF (SPY) showing little change and the Invesco QQQ Trust (QQQ), which tracks the Nasdaq-100, edging down about 0.2%.
The rally underscores the heightened volatility that has characterized Reddit's stock since the company released its latest financial results. Traders have demonstrated a propensity to quickly follow momentum, leading to sharp price swings. A single-day advance of this magnitude refocuses investor attention on the social media platform and ensures that the post-earnings narrative remains active rather than resolved. As a company still valued on its growth potential, even minor adjustments to its business outlook, user metrics, or advertising revenue forecasts can have an outsized impact on its share price compared to more established, mature platforms. Furthermore, its status as a relatively new and less liquid public entity among social media stocks can exacerbate these price fluctuations.
Performance among Reddit's industry peers was mixed on Tuesday. Meta Platforms (META) declined roughly 0.7%, while Pinterest (PINS) advanced about 1% and Snap Inc. (SNAP) gained approximately 1.8%.
Wall Street analysts continued to recalibrate their expectations following Reddit's financial report. According to reports, Goldman Sachs analyst Eric Sheridan reduced his price target on the stock to $206 from $236 on Monday, while maintaining a Neutral rating. In contrast, Citizens analyst Andrew Boone reiterated a Market Outperform rating early Tuesday with a $300 price target.
The catalyst for this renewed analyst and investor scrutiny was the company's fourth-quarter 2025 earnings announcement on February 5. Reddit reported a substantial 70% year-over-year increase in revenue, reaching $726 million. Advertising revenue, a critical component, grew 75% to $690 million. The platform also reported a 19% rise in Daily Active Unique Users (DAUu), bringing the total to 121.4 million. For the first quarter of 2026, management provided revenue guidance in the range of $595 million to $605 million. They also forecast adjusted EBITDA, a key profitability metric, to be between $210 million and $220 million. Concurrently, the company's board authorized a new share repurchase program of up to $1 billion.
Positive business developments contributed to the strong results. Reuters reported that Reddit's artificial intelligence-powered advertising tools successfully attracted a larger base of marketers, with the number of active advertisers soaring more than 75% in the fourth quarter. Industry commentator Jeremy Goldman, a senior director at eMarketer, noted that while expectations were elevated entering the earnings period, the company's performance still managed to surpass them.
However, potential challenges remain for the investment thesis. Analysis from Goldman Sachs highlighted that a portion of the user growth stemmed from "logged-out traffic," sparking a debate among investors about Reddit's ability to convert these visitors into registered, engaged users. A key question is whether the company can sustain its robust advertising growth and protect profit margins while continuing to invest heavily through 2026.
Looking ahead, market participants will monitor the company's next steps closely. Attention will focus on the timing and pace of the newly authorized stock buyback program. Additionally, traders will assess whether the stock can maintain its recent rebound once the immediate catalyst of the earnings report fades from headlines. The next scheduled earnings release is anticipated on April 30, according to data from Public.com, which will serve as the next major checkpoint for the company's financial trajectory.
