The 3 Biggest Reasons to Buy Reddit Stock Before Its July 30 Earnings Report

By Thomas Richmond Published Jul 28, 10:24AM EDT

Quick Read

RDDT has dropped 27% year-to-date despite 69% revenue growth and five straight EPS beats, making it a rare hypergrowth stock on sale.
RDDT's 74% ad revenue growth and GAAP profitability dwarf PINS and SNAP, both of which posted net losses on revenue growth under 18%.
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The 3 Biggest Reasons to Buy Reddit Stock Before Its July 30 Earnings Report — © 24/7 Wall St.

Reddit (NYSE:RDDT | RDDT Price Prediction) enters its July 30 Q2 earnings report with revenue growing 69%, ad sales accelerating 74%, and adjusted EBITDA margin reaching 40.1%. Despite those results and a new $1 billion buyback authorization, the stock is down nearly 25% in 2026, creating a compelling setup ahead of Thursday’s report.

3 Reasons Reddit Is Turning Heads Ahead of Earnings

1. Investors are expecting an earnings beat. Reddit has beaten EPS estimates in five consecutive quarters, most recently posting Q1 2026 EPS of $1.01 vs. $0.5639 estimated (a 79.11% surprise) on $663.41 million in revenue. Polymarket’s real-money odds on a Q2 beat sit at 93%, up from 90% a week ago. Analysts’ average price target of $227.30 implies the stock could have 30.3% upside from its current price of $174.38. Analysts have 21 buy ratings, with 10 holds and 1 sell.

2. Reddit is a capital-light cash machine. Q1 free cash flow reached $311.16 million on capex of just $1.09 million. Cash and equivalents sit at $1.374 billion. Net margin expanded to 30.7% from 6.7% a year ago, and stock-based comp declined 27% YoY. These are retirement-portfolio balance-sheet metrics attached to hypergrowth results.

3. Ad growth is accelerating. Q1 ad revenue grew 74% YoY, global ARPU climbed 44%, and international revenue jumped 76%. Q2 guidance calls for $715-$725 million in revenue and $285-$295 million in adjusted EBITDA.

Reddit Is Growing Far Faster Than Pinterest and Snap

Pinterest (NYSE:PINS) posted 17.8% Q1 revenue growth on a GAAP net loss of $73.59 million and is guiding for 14-16% growth into Q2.

Snap (NYSE:SNAP) grew Q1 revenue just 12.15% with ad revenue up only 3%, posting a $88.95 million net loss.

By comparison, Reddit compounds ad revenue at 74%, is GAAP profitable, and trades at a P/E of 48. The company’s growth rate makes that multiple feel pretty reasonable. Pinterest and Snap lose to Reddit on growth, margins, and the balance sheet.

New Ad Products Could Reduce the Concentration Risk

Advertising still produces roughly 95% of Reddit’s revenue, making any slowdown in marketing demand the central risk. However, growth is broadening across industries, with 11 of its 15 largest advertising categories expanding by more than 50%.

Additionally, Shopify Dynamic Product Ads are live, and Reddit Max campaigns are delivering 17% lower CPA and 25%+ more conversions versus standard campaigns. CEO Steve Huffman framed the moat directly: “Reddit is a one-of-one business powered by deeply engaged communities and authentic human conversation.” With revenue growing 69%, expanding profits, and a $1 billion buyback available, Thursday’s Q2 earnings report will show whether Reddit can maintain its momentum and begin closing the gap with analysts’ $227.30 average price target.

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About the Author Thomas Richmond →

Thomas Richmond is a financial writer and content strategist with 5+ years of experience covering stocks and financial markets. He has published over 250 articles focused on individual stock analysis, helping investors better understand business fundamentals, stock valuations, and long-term opportunities.

Thomas previously served as a Content Lead at TIKR, a stock research platform, where he helped scale the company’s blog to hundreds of articles per month and contributed to a weekly newsletter reaching more than 100,000 investors.

He specializes in breaking down complex companies into clear, actionable insights for everyday investors, with a focus on fundamentals-driven research.

His work has also been featured on platforms including Seeking Alpha and Sure Dividend.

Outside of work, Thomas enjoys weight lifting and soccer.