Reddit is poised to report its second-quarter earnings on July 30th, with analysts anticipating strong growth. The company previously reported 69% revenue growth in Q1 and investors are looking for continued performance. Wall Street consensus expects Q2 revenue to reach approximately $730-$731 million, a 46.3% increase from $499.6 million a year ago, and GAAP earnings per share to more than double from $0.45 to $0.97.
A significant focus for investors remains the renegotiation of Reddit's data licensing deal with Google. The current agreement is valued at $60 million a year, but Reddit is reportedly seeking a usage-based fee, concerned that Google's AI Overviews are directing users away from its platform. The Wall Street Journal recently reported that Reddit considered restricting Google's access to its content, causing a 9% drop in Reddit's stock. Analysts highlight this Google situation as a key risk, with potential impacts on user growth, revenue, and valuation, though CEO Steve Huffman suggests Reddit holds leverage.
Despite the Google uncertainty, analysts from firms like KeyBanc anticipate strong long-term growth for Reddit, projecting revenue to reach $3.24 billion in 2026, $4.30 billion in 2027, and $5.46 billion in 2028. KeyBanc also forecasts EBITDA to climb from $1.43 billion to $2.73 billion over the same period, with an eventual EBITDA margin of around 50%. Reddit has a history of exceeding analyst estimates since its IPO, with revenue growth accelerating and diluted EPS rising significantly.
