Earnings season is starting in a big way. The S&P 500 ($SPX) recently surpassed the 7,000 mark on AI-fueled optimism and rate cut hopes, and that momentum has traders looking for the next breakout. However, the pullback has begun as President Trump’s election to chair the Federal Reserve has injected new volatility into the market, reorienting investors toward names sensitive to interest rates and macroeconomic risks.
Meanwhile, smaller social media plays, such as Trump Media (DJT) and Joyy (JOYY), have seen increasing volume as the meme-style momentum chases headlines and speculation. In that noisy, fast-moving context, Reddit (RDDT) stands out. The company will report fourth-quarter and full-year 2025 results after the close on Thursday, February 5, a date that is already hot among traders seeking actionable alpha.
Without further ado, let’s see what we need to know about the upcoming earnings.
Reddit is an online social news aggregation and discussion platform organized around user-created communities or “subreddits.” It is unique for its highly engaged user base and dual revenue model: the company monetizes through targeted digital advertising and, increasingly, enterprise data licensing services that sell anonymized user data and content to marketing and artificial intelligence partners.
Reddit’s audience expansion has been incredible lately. At the end of Q3 2025, the platform reported 116 million daily active unique visitors and 50.2 million connected users, a huge increase over 2024. This huge growth was driven by major global events, trends in market activity, and content partnerships with Google (GOOG) (GOOGL) Gemini and OpenAI. Not only that, but the company is now also expanding monetization through Reddit Premium, improved advertising tools, and new AI features.
After going public in late 2024, RDDT stock had a banner year. In 2025, it is up about 40%, driven by strong revenue growth of around 68% year-over-year (YoY) in the third quarter and excitement around its data licensing and AI story. However, the stock has since cooled off in 2026, down 21% year-to-date (YTD), indicating profit-taking after the previous rally.
Even with the pushback, Reddit seems highly valued. Its trailing P/E is around 111×, well above the Internet Content and Information industry average of about 32×. Likewise, its price/sales and EV/sales ratios are in the low to mid-20s, well above typical tech peers. Even on a PEG basis of 1.36, Reddit is not cheap. Analysts have already predicted high growth in the stock.
www.barchart.com
So Reddit’s earnings report is almost here and Wall Street is expecting continued strength in the next quarter. Analysts are forecasting around $665.8 million in revenue and around $0.96 in EPS. This follows the strong pace of the third quarter with year-over-year revenue growth of 68%.
Looking back, management hasn’t given formal guidance for the fourth quarter, but CFO Andrew Vollero has pointed to continued double-digit growth and an increase in data licenses. Investors will be watching for any comments on ad spend trends, user engagement metrics and costs. A solid rise in these lines could bolster the stock’s premium valuation, while any weakness, for example slower advertising growth or higher expenses, would likely pressure the stock.
Options traders are preparing for a considerable move. As of now, the 30-day implied volatility in RDDT was around 81.7% with calls at 82.9% and puts at 80.4%, implying an expected post-earnings swing of around 20%. The put and call implied volatility ratio of 0.97 is near neutral, indicating a balanced bias between bullish and bearish contracts.
In simple terms, the options market is showing a lot of caution, so investors are clearly expecting high volatility around the February 5 report.
Reddit has been searching for other new trade deals ahead of the earnings release. For example, Emplifi will connect to Reddit’s business API and Invoca will connect Reddit’s ad data to its analytics package. These deals demonstrate how Reddit is monetizing its huge user base and advertising resources into some of the best data deals. However, analysts believe that such agreements will not bring about any serious changes in the short term; The focus remains on the February 5 results announcement.
One analyst notes that Reddit’s “key near-term catalysts remain execution of ad monetization, traction on data licenses, and any updates around traffic demand from Google.” In other words, management’s guidance on advertising revenue, user metrics and licensing will matter much more than new partnerships.
On Wall Street, analysts generally remain optimistic about RDDT’s prospects. Morgan Stanley recently reiterated an “overweight” rating on RDDT shares and raised its one-year price target to $250, citing “durable growth.”
Goldman Sachs raised its target to $238 and maintained a “Neutral” rating due to optimism about better ad targeting and personalization. Citigroup raised its target to $265 with a “Buy” rating. Other recent targets include Deutsche Bank at $285 and Evercore at $320.
Overall, the consensus is a “moderate buy” with an average target of around $249, suggesting upside potential of over 37% from current prices.
www.barchart.com
On the date of publication, Nauman Khan had no (directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article are for informational purposes only. This article was originally published on Barchart.com
