The 3 Biggest Reasons to Buy Reddit Stock Before Its July 30 Earnings Report
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%.
Act now: the analyst who called NVIDIA in 2010 just named his top 10 AI stocks — and Reddit didn't make the cut. Grab the names FREE today.
Reddit (NYSE:RDDT) 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.
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.
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.
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.
Contact editorial@247wallst.com for any questions or corrections.