Reddit after the fall: growing, profitable, and sold anyway

Reddit reported on Thursday, October 29. Revenue grew 53%, profit came in above estimates, and on Friday the shares fell 29%. The puzzle is easy to state: a company growing this fast, this profitable, now valued at about 19 times its earnings. This post sets out what the numbers show and what the market sold on.

Growing, and now profitable

Revenue was $895 million for July to September, up 53% on a year earlier. Advertising, nearly all of it, rose 54% to $847 million. Net income was $283 million. Over the last four quarters Reddit took in $3.09 billion of revenue, made $992 million of net income and kept about $1.2 billion of free cash flow. It has made a profit every quarter since July to September 2024; the large loss in its first quarter as a listed company was mostly $595 million of stock-based pay recognised at the listing.

Ahead on money, behind on users

Everything measured in dollars beat. Revenue of $895 million topped the $886 million Zacks consensus; earnings of $1.40 a share topped $1.31; revenue per user of $6.87 topped $6.67.

What missed was people. Daily users were 130.3 million, up 12% on a year earlier but short of the 133.5 million analysts expected. In the US, the articles reported daily users down about 2% on a year earlier, and logged-out users, the visitors who arrive from a search, down 4%. Chief executive Steve Huffman wrote that search referral traffic was "down meaningfully in Q3, with the decline accelerating later in the quarter", and that in October search referrals fell by more than a million a week on average. Articles tied the fall to Google's AI summaries answering questions that used to send readers to Reddit threads.

The outlook followed from that. Reddit expects $1.00 billion to $1.03 billion of revenue for October to December, against an average estimate of $1.05 billion. The midpoint is still about 40% growth on a year earlier, down from 53%. Reddit also said it will move to a "primarily logged-in experience", starting with tests outside the US this quarter, to protect its content from AI scraping and support licensing deals with model makers. One analyst who cut their rating wrote that "search traffic is a larger headwind than envisioned".

66% below its high

Friday's close of $91.73 was the lowest since April 2025 and 66% below the high of $270.71 in September 2025. The 14-day RSI, a measure of how one-sided recent moves have been, read 17; below 30 is usually called oversold. Our own tests of RSI as a signal found nothing that held up across the companies Tickr Lab follows, so we read it as a description of the fall rather than a forecast.

From 178 times earnings to 19

This is the part that makes Reddit look cheap. In March 2025 the shares cost 178 times the previous four quarters' earnings; on Friday they cost 19 times. But the share price then was $104.90, not far above today's. Almost all of the change came from earnings per share rising eightfold, from $0.59 to $4.90, while the price ended roughly where it started. Price to sales tells the same story: about 6 times revenue now, against roughly 25 times at the ends of 2024 and of September 2025.

A low P/E on a fast grower usually means the market doubts the growth will last. For Reddit the doubt is specific: whether advertising can keep growing at 40% or more when the number of people visiting has stopped rising in its biggest market.

The two worst days came last

Reddit has moved hard after nearly every report: up 42% after its third quarter of 2024, up 17% a year later. The last two have been its two worst days, down 21% in July and 29% on Friday, as reported growth slowed from a peak of 78% to 61% and then 53%. Both times the money beat and the market reacted to what the release said about users and the quarter ahead.

What the Signal reads

Tickr Lab's Signal for Reddit after Friday's close is Very Weak, and the rule that fired is Breakdown: more than 10% below its 200-day average and still falling, down 39% over a month and 41% over three. Reddit scores well on the fundamentals the Signal checks: profitable, cash generating, a high return on equity. But the rules run in order and the trend rules come first, so a company this far below its trend reads Very Weak whatever its profits. It would read differently once the price stops falling and recovers toward its averages, not because the earnings improve.

What to watch

The next report, early in 2027, will answer the question the market is asking. Two numbers matter more than the rest: whether revenue lands inside the $1.00 billion to $1.03 billion range, and whether US daily users, logged-in ones especially, start growing again as the logged-in change takes hold. About 15% of the shares available to trade were sold short at the last count, so a surprise either way could move the price sharply.

None of this says where Reddit's shares go next. It is what the company reported, what was expected, and how the price and its Signal read now, measured the same way Tickr Lab measures every company.

Revenue, net income, free cash flow and earnings per share (GAAP, diluted) are from Reddit's results releases. Share prices are daily closes from March 22, 2024 to October 30, 2026. P/E uses the closing price at each quarter end over the four quarters' earnings per share to that quarter; price to sales uses market value from the diluted share count. Analysts' estimates are as the articles about the report quoted them: Zacks for revenue and earnings per share, the analyst averages Zacks and Bloomberg reported for users, revenue per user and the fourth-quarter outlook. US user figures and the analyst's comment come from the full text of the articles in Reddit's Yahoo Finance feed. The Signal uses the Balanced rules after the October 30 close; short interest is our data provider’s latest figure as a share of the float.