Shares of Reddit Inc. (RDDT) rallied more than 6% on Thursday, breaking a four-session losing streak, after Piper Sandler data revealed a sharp acceleration in user growth during August. The brokerage's analysis of Reddit Ads Manager data showed average users increased 8% month over month, the strongest monthly gain so far this year, following a 2% decline in July.
The August surge was driven primarily by the Feed audience, which added 79 million users, while Conversation users dipped by 1 million. Total audience growth accelerated to 18% year over year, up from 12.8% in July, according to Piper Sandler.
International users lead the charge
International markets were the standout driver, with audience growth jumping to 29.3% year over year in August from 19% in July. U.S. users grew 5.2%, but domestic growth continued to lag the international segment. Piper noted that weekly user momentum has remained strong since early July, largely thanks to the International Feed.
These third-party estimates align with Reddit's own second-quarter results, which showed international daily active uniques rising 28% year over year to 77.1 million, while U.S. daily active uniques increased 6% to 53.2 million. Global daily active uniques climbed 18% to 130.3 million, and weekly active uniques surpassed 500 million, up 24% to 514.6 million.
Advertising outlook brightens
The user growth data is a positive signal for Reddit's advertising business. Piper Sandler said August ad spending across its digital advertising dataset was 60 basis points above expectations, with Netflix, Roku, YouTube, and Pinterest among the biggest positive surprises. The brokerage raised its third-quarter ad-spending growth estimate by 30 basis points, and its estimate for Reddit's own ad-spending growth by the same amount.
Reddit's second-quarter financials underscore the monetization opportunity: revenue rose 61% year over year to $805 million, with international revenue surging 84% to $167 million. As international user growth accelerates, Reddit is well-positioned to expand monetization beyond the U.S. market.
Upcoming methodology reset
Despite the positive trends, Piper Sandler cautioned that changes to Reddit's Ads Manager forecasting model are expected to reduce September audience-size estimates by about 20%. The brokerage emphasized that this one-time reset reflects a methodology change, not a deterioration in underlying user trends. The adjustments affect forecasting only and are not expected to impact auctions, optimization, or ad delivery.
Investors appeared encouraged by the acceleration in audience growth, particularly internationally. The data also bodes well for Reddit's advertising opportunity, though the upcoming reset in reported audience estimates could complicate near-term comparisons. For broader market context, recent inflation data and labor market trends remain key macro factors for tech stocks.
This article is for informational purposes only and does not constitute financial advice.
