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Reddit RDDT shares have plunged 38.8% in the year-to-date period, underperforming the broader Zacks Computer & Technology sector’s decline of 2.6%. The Zacks Internet - Software industry increased 5.4% in the same time frame.
Shares of the company have underperformed its closest peer, Alphabet GOOGL. Shares of Alphabet have lost 10.5% in the year-to-date period.
The underperformance can be attributed to the challenging macroeconomic conditions, and tariffs negatively impact spending, particularly discretionary spending, which might impact digital ad spending.
YTD Performance
Image Source: Zacks Investment Research
Will RDDT’s Expanding Portfolio Aid Prospects?
Reddit’s focus on diversifying its advertising solutions and enhancing ad efficiency has emerged as a critical growth driver for its business. Higher user engagement and the company’s growing artificial intelligence (AI) initiatives are noteworthy. Ad revenues increased 61% year over year to $358.6 million in the first quarter of 2025.
The company recently expanded its shopping solutions by launching Dynamic Product Ads, which are available in general. It enables advertisers to deliver personalized, contextually relevant ads that boost engagement and Return on Ad Spend.
With new features like improved machine learning targeting and larger catalog support, Reddit helps brands connect with high-intent shoppers. Additionally, Reddit integrated with Smartly, enabling advertisers to manage and optimize campaigns across channels with creative automation and unified reporting.
The company’s expanding portfolio has been a key catalyst. In May 2025, RDDT enhanced Reddit Pro with streamlined profile setup and new tools that allow businesses to showcase community conversations. These updates make it easier for brands to build trust, connect authentically, and engage with Reddit’s vast network of communities.
RDDT’s Benefits From Expanding Partnership
Reddit’s expanding partner base also strengthens its competitive prowess. RDDT expanded its collaboration with Integral Ad Science IAS in April to offer advertisers enhanced measurement capabilities.
Integral Ad Science’s Total Media Quality for Reddit now delivers greater transparency, comprehensive reporting, and advanced AI-driven technology. With Integral Ad Science supporting global coverage across Reddit’s platforms, advertisers can confidently engage with real users and optimize campaign performance.
Reddit Earnings Estimates Show Upward Trend
For the second quarter of 2025, RDDT expects revenues between $410 million and $430 million.
For the second quarter of 2025, the Zacks Consensus Estimate for revenues is pegged at $426.12 million, indicating year-over-year growth of 51.55%.
The consensus mark for earnings is pegged at 19 cents per share, which has increased 72.7% in the past 30 days, indicating year-over-year growth of 416.67%.