Reddit (RDDT) shares soared 6% on record August user growth data

Core Points

Global markets drive user expansion
Advertising revenue forecasts are rising

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According to Piper Sandler, Reddit achieved 8% month-on-month user growth in August, the strongest monthly performance in 2026. Boosted by the news, Reddit shares rose more than 6%.

The year-on-year growth rate in August reached 18%, up from the 12.8% growth rate in July. Global users are the main driver of this growth, with a year-on-year growth of 29.3%, further accelerating from the 19% growth rate in July.

The investment firm raised Reddit's forecast for third-quarter advertising spending growth by 30 basis points.

It is expected that the September methodological adjustment will reduce audience estimates by approximately 20%, but this reflects a change in prediction models rather than a decrease in actual users.

Reddit (RDDT) shares rose more than 6% during Thursday's trading session, ending a previous four-day downtrend. The rebound was helped by data released by Piper Sandler on strong user expansion in August.

Reddit, Inc., Before the rise, RDDT

RDDT was trading at $156.42. The stock has fallen 35.3% this year and is still below the 52-week high of $270.71 set in September 2025, a decline of 42.2%.

According to Piper Sandler's analysis of Reddit Ads Manager metrics, the average number of platform users increased by 8% month-on-month in August. This was the largest monthly expansion this year, reversing a 2% contraction in July.

The year-on-year audience indicator climbed to 18%, up from the 12.8% recorded in July.

Global market drives user expansion

International market expansion provides the main catalyst. According to research by Piper Sandler, global user growth in August reached 29.3% year-on-year, significantly accelerating the 19% growth rate in July.

Domestic users in the United States grew by 5.2%, but the growth rate in the United States is still slower than that in international territories.

Users based on information flow increased by 79 million in August. At the same time, the number of users focused on conversation fell by 1 million during the same period.

Reddit's second-quarter earnings report provides more perspective. International daily active unique users (DAU) increased by 28% year-on-year to 77.1 million, while the U.S. daily active unique users increased by 6% to 53.2 million. Weekly active unique users exceeded the 500 million mark, reaching 514.6 million, a year-on-year increase of 24%.

Total revenue for the second quarter was US$805 million, a year-on-year increase of 61%. International market revenue jumped 84% to US$167 million.

Advertising revenue forecast is rising

User expansion data is of great significance to Reddit's advertising business. Expanding the user base often means increased advertising inventory and improved revenue opportunities.

According to Piper Sandler, advertising spending exceeded expectations by 60 basis points in August in its digital ad tracking data set. Platforms such as Netflix, Roku, YouTube and Pinterest performed particularly strongly in this data set.

The company raised its third-quarter advertising spending growth forecast by 30 basis points and made a similar upward adjustment to Reddit's individual quarterly advertising spending growth estimates.

Although the trend is favorable, Piper also points to potential complications. Changes to Reddit Ads Manager's forecasting methodology are expected to reduce audience size forecasts for September by approximately 20%.

Piper emphasized that this adjustment stems from a recalibration of methodology rather than an actual slowdown in user growth. Resetting will not affect ad auctions, event optimizations or delivery mechanisms.

It is worth noting that Reddit is facing increasing regulatory scrutiny in the European market. The European Union recently classified Reddit as one of its strictest categories under the framework of the Digital Services Act, designating it as a "very large online platform." This classification requires them to comply with enhanced anti-hazard regulations and conduct a comprehensive systematic risk assessment by December 2026, and fines for violations can be as high as 6% of global annual revenue.

RDDT has experienced 59 price movements of more than 5% in the past year, indicating that Thursday's rally, while positive, was in line with the stock's established volatility pattern.