Should You Buy Reddit (RDDT) Stock Ahead of Q2 Earnings? Analyzing the Key Factors

Key Takeaways

• Q2 earnings announcement scheduled for July 30 following market hours
• Wall Street forecasts 46.3% revenue increase to $731 million with GAAP EPS of $0.97
• First quarter advertising revenue surged 74% to $625 million; platform reached 126.8 million daily active users
• Ongoing $60 million Google data licensing negotiations represent primary uncertainty factor
• Analyst consensus shows Moderate Buy rating with $226.29 average target price, suggesting 26% potential gain

As Reddit (RDDT) approaches its July 30 earnings announcement, shares are trading at $179.23, reflecting a 20% decline year-to-date following a January correction, yet maintaining a remarkable 400%+ gain since the company’s 2024 initial public offering.

Reddit, Inc., RDDT

Thursday’s after-hours release is anticipated to show quarterly revenue reaching $731 million, marking 46.3% year-over-year expansion, alongside GAAP earnings of $0.97 per share — substantially exceeding the $0.45 recorded during Q2 2025.

The social platform’s first quarter performance exceeded similar projections, delivering 69% revenue growth totaling $663.4 million. Reddit reported net income of $204 million alongside free cash flow generation of $311.2 million.

Advertising revenue represented the primary growth engine, expanding 74% to reach $625 million. The company experienced approximately 32% growth in ad impressions while average cost-per-impression increased by comparable margins.

Company leadership has established Q2 revenue guidance between $715 million and $725 million with adjusted EBITDA projected at $285 million to $295 million. Performance exceeding these parameters could trigger positive share price movement.

Platform engagement metrics showed daily active users climbing to 126.8 million during Q1, representing 17% annual growth. International weekly active users expanded 33%, significantly outpacing the 10% domestic increase.

Monetization disparities between geographic markets remain substantial. International users generated average revenue of $2.02 compared to $9.63 domestically, presenting significant opportunity as the platform enhances translation capabilities and regional content offerings.

The Google Question

Thursday’s primary focus will center on Reddit’s contentious negotiations with Google regarding content licensing arrangements. Both entities have been restructuring an agreement valued at approximately $60 million annually.

Sources indicate Reddit is advocating for usage-based compensation models, expressing concern that Google’s AI Overviews feature redirects traffic to Google’s summaries rather than driving engagement to Reddit’s platform.

Shares declined 9% during a single trading session last week following Wall Street Journal coverage suggesting Reddit had contemplplate restricting Google’s content access.

Investor attention during the earnings call will concentrate on this partnership’s status. A successful renegotiation could generate substantial high-margin licensing revenue streams. Relationship deterioration risks both licensing income reduction and organic search traffic decline.

Ad Business Stays Strong

Regarding advertising fundamentals, Alphabet disclosed 14% advertising revenue growth during Q2, indicating overall digital advertising market strength. This macroeconomic backdrop favors Reddit’s upcoming results.

Advertising comprised approximately 94% of Reddit’s Q1 revenue composition. While this concentration presents vulnerability should advertising demand soften, current indicators demonstrate positive momentum.

Reddit has established a pattern of providing conservative forward guidance, increasing the probability of surpassing consensus projections.

Analyst community currently assigns RDDT a Moderate Buy consensus, comprising 13 Buy recommendations, 8 Hold ratings, and zero Sell ratings across the past three months. The consensus price target stands at $226.29, representing approximately 26% upside potential from present trading levels.

Reddit’s Q2 financial results will be released following market close on July 30.

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