Reddit’s ad business is surging. But you wouldn’t know it from its stock price.
Reddit reported on Thursday $690 million in ad revenue for Q4 2025, a 75% year-over-year increase. Its ad biz grew by at least 60% each quarter of 2025.
Reddit also saw its active advertiser count grow by 75% YOY in Q4.
In addition, Reddit reported $2.1 billion in total 2025 ad revenue – topping $2 billion in annual ad revenue for the first time and improving on its 2024 revenue by 74%.
But despite these gains, the company’s stock is down 38% over the past month. And Reddit’s strong Q4 revenue performance resulted in only a modest 5% rebound in its share price in after-hours trading on Thursday.
What gives? It could be due to a recent insider selling spree or analyst concerns about Reddit’s small and midsize advertisers.
Or it could be a market correction. Reddit’s closest social media peers, Snap and Pinterest, also saw their stocks drop by 38% and 27%, respectively, in the past 30 days.
Or these platforms could be wrapped up in an overall downturn in the stock market that has harshly impacted the tech sector and related companies. The Dow Jones Industrial Average, S&P 500 and Nasdaq Composite all dropped by more than 1% on Thursday.
Whatever the reason for its stock price decline, Reddit took another victory lap on the strength of its Q4 performance. It touted its full-funnel platform for brands and its investments in measurement for yielding incremental revenue.
And Reddit COO Jen Wong said the platform’s still unmonetized nascent AI search platform, Reddit Answers, is an “enormous” opportunity for future growth.
Fully full-funnel
Although Reddit Answers doesn’t currently feature ads, Wong said the more conversational search interface should be additive to the platform’s current engagement.
And engagement is already on the upswing, with Reddit reporting an average of 121.4 million daily active unique users, up 19% YOY. Wong said this impression growth was the main factor behind the company’s wins this quarter.
Wong added that AI search – which is typically associated with a “shopping, lower-funnel, high-intent mindset” – should open up new opportunities for Reddit’s performance-minded advertisers.
Speaking of performance, since it went public in 2024, Reddit has had a reputation for being focused on lower-funnel conversions and courting performance budgets from smaller direct-to-consumer brands.
Indeed, Wong noted that “revenue from lower-funnel objectives such as purchase conversions and app installs doubled year over year.” Reddit also improved ROAS for lower-funnel advertisers by 75% YOY in Q4.
Revenue from small and midsize businesses also doubled year over year, Wong said. And revenue covered by Reddit’s conversion API tripled each quarter of 2025.
Given the platform’s performance-focused reputation, an investor pointed out that, while Reddit’s performance revenue outgrew its brand awareness revenue in 2024, it appears those two revenue lines converged in 2025. The investor asked if Wong expects performance to once again take the lead this year, with the company building out its AI search platform and bringing its AI-powered Reddit Max campaign optimization solution to beta in January.
Wong responded that Reddit is a full-funnel advertising solution, and it plans to further develop its brand awareness platform this year. For example, she pointed to Reddit’s Interactive Ads, which let brands create custom, interactive formats like gamified ads, countdowns and quizzes, as an emerging brand-building opportunity.
She added that, last year, Reddit also made key investments in video, such as using machine learning to push deeper video views. “We’re going to go deeper on that for video-forward advertisers,” Wong said, including by offering longer video ad lengths.
Wong also said mid-funnel click volume grew by 60% in Q4. And she said Reddit launched a beta test of a new budget optimization solution for mid-funnel campaigns during the quarter.
Growing engagement
But platform improvements and impression growth weren’t the only forces behind Reddit’s ad revenue growth in Q4. Wong also pointed to pricing increases for Reddit’s ad inventory as a growth vector.
Wong declined to break out pricing increases relative to impression growth in response to an investor question. But she said that pricing growth has come as a result of Reddit’s efforts to improve ROAS for advertisers through initiatives such as Reddit Max optimization and CAPI integrations. “The measurement piece becomes very important in supporting those [ROAS] gains,” she said.
Speaking of Reddit Max, in early test campaigns, brands averaged a 17% decrease in cost per acquisition and a 27% increase in conversion volume, Wong said. These kinds of gains validate Reddit Max as a performance driver, she added.
But Reddit also previewed a change in how it will report on-platform engagement going forward that seemed to raise some concerns among investors. Namely, Reddit said it would stop distinguishing between logged-in and logged-out users in future earnings reports.
Asked by an investor whether Reddit removing this distinction indicates monetization parity between the two audiences, Wong responded that “logged-in users and logged-out users both see ads, and the value of those impressions is the same.” Which is a take many publishers and advertisers would likely disagree with, since logged-in audiences are typically considered more valuable because advertisers can more effectively personalize the ads they see.
“Our strategy is to increase engagement,” Wong said. Reddit sees platform improvements like its integration of AI search as its key engagement drivers for the future, rather than using first-party data from logged-in users to personalize their experience.
“We want the weekly users that we have to become daily users,” Wong said. “And we don’t want having to be logged in to be a criteria for personalization.”
