Home / Business and Economy / Reddit's Q2: Revenue Soars, Profit Jumps
Reddit's Q2: Revenue Soars, Profit Jumps
23 Sep
Summary
- DA Davidson maintains Buy rating but lowers Reddit's price target.
- Reddit reported $805 million in Q2 revenue, with 18% user growth.
- Analysts remain positive, with a median price target implying 34% upside.
On September 17, DA Davidson adjusted its outlook on Reddit, Inc. (NYSE:RDDT), reducing the price target from $200 to $185 while reaffirming a Buy rating. The firm noted potential short-term challenges in daily active user growth, referencing data that suggests global user numbers might fall below expectations.
Despite these traffic trend concerns, DA Davidson anticipates that enhanced app engagement could lead to increased average revenue per user. This, they believe, will enable Reddit to sustain robust revenue growth and potentially cultivate a more engaged user base.
Reddit's financial performance in Q2 2026 countered these concerns, revealing an 18% year-over-year increase in daily active uniques to 130.3 million. This surge contributed to an $805 million revenue figure, marking the eighth consecutive quarter of over 60% year-over-year revenue growth.
Profitability also saw a marked improvement, with net income reaching $253 million in the quarter, a substantial increase from the prior year. This financial strength indicates continued rapid revenue expansion alongside significant profitability gains.
Year-to-date, Reddit's stock has declined over 30%, underperforming the S&P 500. However, hedge fund interest grew in Q2, with 91 funds holding positions, up from 70 in Q1. Short interest remains elevated at 13.96% as of August 31.
Analyst sentiment remains predominantly positive, with 66% of 35 covering analysts rating the stock a Buy. The median 12-month price target of $212.50 suggests a potential upside of nearly 34% from its recent trading price.
