Reddit Surges in After-Hours Trading on Strong Ad Demand and AI Expansion
Reddit shares soared nearly 50% in after-hours trading following recent session gains, as the company benefits from rapid advertising growth, new AI ad tools, and strong quarterly results.
Reddit, Inc. (NYSE:RDDT) shares surged 49.7% in after-hours trading to $158.17, according to ChartMill, extending a regular-session advance of 7.08% where the stock closed at $105.66. Despite the sharp rebound, the stock remains down 28.9% over the past month and has dropped 57.1% year to date, as reported by Zacks Investment Research.
The social media platform continues to see solid momentum across its core business. In the third quarter of 2026, advertising revenue grew 54% year over year to $847 million, driven by higher ad pricing and impressions. Total revenue expanded 53% to $895 million, or $894.96 million according to MarketBeat reports, surpassing consensus expectations of $874.91 million. Third-quarter earnings reached $1.40 per share, topping analyst estimates of $1.33 per share.
Performance advertising and automated marketing tools are fueling engagement. Conversion volumes more than tripled during the third quarter, while click volumes rose more than 50%. The company reported that international advertising revenue jumped 68%, outperforming 51% growth in the United States. Revenue from shopping and app-install objectives each increased by more than 95%, while adoption of its AI-powered Reddit Max tool more than tripled sequentially after entering public beta.
For the fourth quarter of 2026, Reddit management projected revenue between $1 billion and $1.03 billion, representing about 40% growth year over year at the midpoint. Meanwhile, Zacks Investment Research noted that the consensus earnings estimate for the full year 2026 sits at $5.42 per share, indicating 106.87% annual growth.
Wall Street analysts have maintained a favorable outlook overall, though several firms adjusted their targets following earlier share declines. MarketBeat reports an average rating of Moderate Buy. Benzinga reported that Guggenheim lowered its price target from $170.00 to $140.00 on Tuesday while maintaining a Buy rating. B. Riley Financial and Needham & Company LLC previously cut their targets to $190.00 and $150.00 respectively, while Loop Capital lowered its rating to Hold with a $100.00 target.