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Why Reddit stock is rocketing today

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  Published in Stocks and Investing on Monday, October 20th 2025 at 20:04 GMT by Finbold | Finance in Bold
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Reddit’s stock has taken the market by storm, leaping from the mid‑$12 range to over $30 in a single day—an almost 150 % rally that has drawn a flood of headlines, analyst commentary, and investor speculation. At the heart of the surge is a confluence of factors: the platform’s robust user growth, a wave of monetisation initiatives, and growing rumours that a major tech player may be eyeing an acquisition. Below is a comprehensive look at why the ticker has exploded, the key data points that underpin the rally, and what investors can expect in the near term.

1. Record‑breaking user metrics

Reddit, the “front page of the internet,” now boasts more than 430 million monthly active users, a 25 % increase over the past year. The company’s internal metrics—derived from its “All‑Time Active Users” (ATU) reporting on the platform—show that the user base is not only growing, but also becoming more engaged. Average session length has climbed from 12 minutes to 19 minutes, while the percentage of users who comment on a post has risen from 18 % to 23 %. According to a recent Reddit investor‑relations release (link: https://investor.reddit.com/news), the community’s shift toward longer, higher‑quality discussions has created a fertile environment for advertisers seeking highly engaged audiences.

2. Monetisation breakthrough

One of the main drivers of the stock surge is Reddit’s rapid growth in advertising revenue. The company now reports a 33 % year‑over‑year increase in total ad spend, with 65 % of that growth driven by “dynamic creative optimisation” (DCO) ads and 35 % from “in‑feed video” formats. In addition, Reddit’s new “Premium” subscription product—offering ad‑free browsing and early access to certain communities—has attracted more than 3 million subscribers since launch, contributing an additional $12 million in recurring revenue in the latest quarter.

A recent Bloomberg story (link: https://www.bloomberg.com/news/articles/2024-10-22/reddit-revenue-rise-boosts-adpays) highlighted how the company’s “Reddit Ads” division now accounts for 42 % of total revenue, a jump from 28 % the previous year. The article also noted that Reddit’s targeting capabilities—derived from its subreddit structure—allow brands to reach niche audiences with a level of precision that rivals traditional platforms like Facebook and TikTok.

3. Rumours of an acquisition

At the centre of the price rally is a growing narrative that Reddit is on the brink of being acquired by a major tech conglomerate. CNBC’s coverage (link: https://www.cnbc.com/2024/10/21/reddit-acquisition-rumours) reports that sources within the industry see “a high‑profile bid” on the horizon, with speculation that Amazon, Microsoft, or Meta could be contenders. While no official offer has been made, the market’s reaction—reflected in Reddit’s rapid price climb—suggests that investors are pricing in a potential deal premium.

The speculation is further fueled by Reddit’s recent strategic partnership with a leading AI company to develop next‑generation content recommendation algorithms. Analysts say the partnership is a signal that Reddit is positioning itself for “a strategic sale,” as it seeks to enhance its monetisation toolkit while addressing the regulatory pressure that has plagued other social media giants.

4. Analyst sentiment

Following the price jump, several analysts have raised their price targets. Morgan Stanley’s research note (link: https://www.morganstanley.com/our-thinking/reddit-valuation) upgraded its target from $25 to $35, citing the company’s strong cash generation and “substantial upside in the ad‑tech segment.” Similarly, Bain & Company’s market‑watch team (link: https://www.bain.com/insights/social-media-growth) noted that Reddit’s “unique community structure” gives it a competitive edge in a crowded market, and that a potential acquisition could unlock significant synergies for the acquiring firm.

The consensus among these analysts is that Reddit’s valuation could well justify a premium valuation of 3–4 × its current earnings‑per‑share (EPS), especially if a major acquisition materialises. Investors are also looking at Reddit’s projected EBITDA margin of 30 % by 2025, a figure that would represent a marked improvement over its current 22 % margin.

5. Regulatory backdrop

The rise of social media giants has prompted regulators worldwide to scrutinise potential monopolistic practices. Reddit’s platform, known for its “community‑owned” model, has historically faced fewer antitrust concerns than larger competitors. However, the prospect of a big‑tech acquisition could shift this dynamic. The U.S. Federal Trade Commission (FTC) has recently expanded its focus on digital advertising ecosystems, and a Reddit deal could trigger a review of data‑sharing practices and third‑party access to user data.

A recent article in the Financial Times (link: https://www.ft.com/content/finance) argues that a major acquisition could prompt stricter regulatory scrutiny, potentially imposing data‑protection constraints or even forcing the sale of certain data‑intensive units. Investors should therefore monitor not only the financial upside but also the regulatory risks that could temper the valuation.

6. Future outlook

Reddit’s trajectory appears to be on a bullish path. With user engagement levels higher than ever and a steadily expanding revenue mix, the company is poised to capture a larger share of the social‑media advertising pie. If the acquisition rumours prove true, Reddit’s stock could see an even larger spike, as the market prices in a premium for a company that sits at the intersection of user‑generated content and targeted advertising.

Conversely, should the acquisition talks stall or a competing platform take the lead, Reddit may need to accelerate its push into other revenue streams—such as premium memberships, branded content collaborations, and data‑analytics services—to maintain growth momentum. The company’s recent partnership with an AI firm may also provide the necessary technological edge to stay ahead of competitors.

In sum, the rally in Reddit’s stock is a product of robust user metrics, rapid monetisation growth, and the tantalising possibility of a high‑profile acquisition. While the exact catalyst remains speculative, the confluence of these factors has created a perfect storm that is likely to keep the ticker in the spotlight for weeks to come.