Can ‘Reddit Max’ Save RDDT From Slower Growth Guidance on Oct. 29?
Reddit beat earnings six quarters straight yet its stock sits deep in the red, and the Oct. 29 report hinges on whether a brand-new AI ad tool can convince investors the slowdown is temporary.
Reddit (NYSE:RDDT | RDDT Price Prediction) reports third-quarter results on Oct. 29 with shares down 37.25% year to date. Management already guided to slower growth, so the key question is whether Reddit Max can carry the quarter.
Record Profits Meet a Cooler Guide
Last quarter, Reddit posted EPS of $1.25 against a $0.9673 consensus. Revenue rose 61% to $805 million, advertising revenue climbed 64% to $762 million, and adjusted EBITDA margin reached 43%. It marked the eighth consecutive quarter of over 60% revenue growth.
Then came the guide. Management forecast Q3 revenue of $860 million to $870 million, meaning 47% to 49% growth, with adjusted EBITDA of $385 million to $395 million. Search referrals turned choppy late in Q2, and visibility remains low.
Shares slid 7.61% over the past week to $144.25, below the $180.90 level at the last report.
Analysts Already Expect Reddit to Clear Its Own Range
| Metric | Consensus | Prior Year | Estimated YoY Growth |
|---|---|---|---|
| Q3 2026 EPS | $1.3247 | $0.80 | 66% |
| Q3 2026 Revenue | $875.0 million | $584.9 million | 50% |
| FY 2026 EPS | $5.3939 | $2.62 | 106% |
| FY 2026 Revenue | $3.39 billion | $2.20 billion | 54% |
The revenue consensus sits above the top of management’s range, so analysts expect Reddit to beat its own guide again.
Reddit Max Adoption and Search Traffic Will Set the Tone
Reddit Max is the key factor. The AI-powered campaign tool automates targeting and creative, and advertisers using Max grew over 60% from Q1 while Max revenue grew over 150%. The wide rollout to all advertisers came in September, so this report offers an early look at broad adoption.
Early results give management a strong case. Lenovo saw 40% higher purchase value with Max than a standard campaign, and app-ad tests showed a 15% reduction in cost per action. Management also admitted SMB onboarding with Max still needs basic work, and I want an update on that fix.
You should look at user metrics just as closely. U.S. logged-in user growth was just 1% last quarter, and starting with Q3 Reddit will no longer report logged-in and logged-out daily active users separately. Expect analysts to press on that change.
Search matters too. Management said product-driven user increases were offset by declining search referrals, and AI Overviews from Alphabet (NASDAQ:GOOGL) threaten the drive-by traffic Reddit monetizes. On data licensing with Google and OpenAI, CEO Steve Huffman said there was no change in Reddit’s data-licensing strategy but gave no renewal timeline.
Fourth-Quarter Guidance Could Reset the Growth Story
Reddit exceeded revenue estimates in each of the last six quarters, yet the stock still trades well below where it started the year. That tells me investors care more about the growth path than another beat. Q4 revenue consensus of $1.05 billion would mark Reddit’s first billion-dollar quarter. If management’s guide supports that number and Max expands the advertiser base, the slowdown starts to look like a pause.
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After two decades of patrolling the dark corners of suburbia as a police officer, Rich Duprey hung up his badge and gun to begin writing full time about stocks and investing. For the past 20 years, he’s been cruising the markets looking for companies to lock up as long-term holdings in a portfolio while writing extensively on the broad sectors of consumer goods, technology, and industrials. Because his experience isn’t from the typical financial analyst track, Rich is able to break down complex topics into understandable and useful action points for the average investor. His writings have appeared on The Motley Fool, InvestorPlace, Yahoo! Finance, Money Morning, and, of course, 24/7 Wall St. He has been featured in both U.S. and international publications, including MarketWatch, Financial Times, Forbes, Fast Company, and USA Today.
