Reddit Stock (RDDT) Rallying After Hours on Strong Q4 Beat, $1 Billion Buyback

Reddit's stock price (NYSE:RDDT) jumped 7.69% in overnight trading, following a robust fourth-quarter earnings beat and the announcement of a $1 billion share repurchase program, offering relief to shareholders after a brutal year-to-date decline of 37.55%.

The social media platform reported fourth-quarter revenue of $725.6 million, a 69.7% year-over-year increase that handily surpassed analyst expectations of $667.5 million.

GAAP earnings per share came in at $1.24, beating consensus estimates of $0.93 by 33.1%. The stock closed regular trading at $151.08, down 1.05%, before rallying to $167.88 in after-hours trading as markets digested the better-than-expected results.

Reddit's full-year 2025 performance underscored the strength of the quarter, with annual revenue reaching $2.3 billion, a 65% surge from the prior year. The company swung to profitability with net income of $500 million and a net margin of 21.7%, a remarkable turnaround from its loss-making history.

Daily Active Uniques, a key engagement metric, grew 19% to 116 million, demonstrating the platform's ability to attract and retain users despite intensifying competition in the social media landscape.

The announcement of a $1 billion share repurchase program provided additional fuel for the after-hours rally. The buyback signals management's confidence in the company's financial trajectory and represents a significant capital return initiative for a relatively young public company. 

The path to the earnings release had been treacherous for Reddit shareholders.

The stock has plummeted 37.55% since the start of the year leading into the report, falling from around $241 to $151.05 into the print. This sharp decline reflected mounting concerns over the sustainability of Reddit's AI data licensing deals, particularly after reports suggested declining citation rates from ChatGPT, which had been a significant revenue driver through partnerships with OpenAI.

The earnings beat represents a validation of Reddit's business model transformation from a loss-making community platform to a profitable enterprise capable of generating substantial cash flow. The $1 billion buyback program, representing roughly 2.7% of the current market cap, provides a floor for the stock while management continues to execute on its growth strategy.