Reddit Could Beat Revenue Estimates. Watch This Data Instead.

Reddit stock has declined 10% this year. (Tiffany Hagler-Geard/Bloomberg)

Reddit investors will be paying close attention to daily active user growth in the company’s upcoming earnings report as web-traffic trends continue to evolve.

Reddit is scheduled to report second-quarter financial results after the stock market closes on July 31. Analysts surveyed by FactSet expect the the social-media site, which is used by many as source of answers to a variety of questions, to post revenue of $425 million, a 51% increase from the previous year.

Reddit makes most of its money from advertising, and the space has been changing to increasingly favor digital. Digital advertising allows a client to promote itself through social media or other online channels, a less expensive process than promoting large campaigns through traditional advertising agencies. Ad agency Abbey Mecca reported in June that global ad spending will surpass $1 trillion for the first time this year, and digital advertising should make up 75.2% of global ad spend.

Citi analyst Ronald Josey wrote in a research note on Tuesday that “given our advertiser checks, we believe [Reddit’s] 2Q25 results are likely to come in above consensus expectations across most all metrics.” He rates Reddit as a Buy with a $163 price target.

Reddit has been working to expand its advertising tools. At the Cannes Lions Festival last month, the company introduced “Reddit Community Intelligence,” which it says turns “Reddit’s 22+ billion posts and comments into structured intelligence for smarter marketing decisions.”

A revenue beat isn’t going to be enough to reinvigorate investor sentiment, though. Wall Street has been concerned about slowing daily active user growth following search changes, especially the introduction of AI Overviews at Alphabet’s Google. AI Overviews are the artificial-intelligence generated summaries that appear at the top of Google search pages. Users are relying more on the brief, bulleted responses to queries and clicking less on blue website links in the search results. As Barron’s recently reported, traditional search referrals have fallen since the introduction of AI Overviews.

Citi’s Josey wrote that investor focus “is likely to be primarily on [daily active user] trends following several Google algorithm changes and we’ll be listening for insights on July traffic.”

Reddit’s daily user growth went from 37% in the first quarter of 2024 to 31% in the first quarter of 2025.

Shares of Reddit have dropped 10% this year to $145.29, compared to the 7% rise of the S&P 500 .

Write to Angela Palumbo at angela.palumbo@dowjones.com