Company Overview: Reddit, Inc. (NYSE: RDDT) operates a social platform, Reddit. Reddit is a community of communities. It is built on shared interests, passion, and trust and is home to open and authentic conversations on the Internet. Reddit is a global, digital city where anyone in the world can join a community to learn from one another, engage in authentic conversations, explore passions, research new hobbies, exchange goods and services, create new communities and experiences, share a few laughs, and find belongings. 

 As per our previous Kalkine’s American Technology Report published on ‘RDDT’ on 27^th May 2025, Kalkine provided a ‘Buy’ stance on the stock at USD 102.32, based on “Reddit Inc.’s impressive Q1 2025 diluted EPS of USD 0.13, reflecting a significant improvement from a USD 8.19 loss in Q1 2024, its global market expansion with international ad revenue growing 83% year-over-year, the launch of innovative features like Reddit Answers reaching 1 million weekly users, a robust user engagement with 108.1 million daily active uniques as of March 31, 2025, and a USD 127.6 million operating cash flow”, giving a return of 10.90%, attaining resistance 1 and closing towards resistance 2.

Current Macro and company specific rationales:

• Trade Tensions Disrupting Global Expansion Plans: The escalating U.S.-China trade conflict, marked by China’s 30% tariff on U.S. imports, poses challenges for Reddit, Inc. (RDDT) by potentially increasing operational costs for any planned expansion into the Asia-Pacific region, where it aims to grow its user base, which could delay market entry, strain financial resources, and limit international revenue growth opportunities in the near term.
• S. Recession Concerns Impacting Ad Revenue Growth: With U.S. recession fears circulating in economic discussions around May 2025, Reddit faces risks to its primary revenue stream—advertising—as businesses may reduce marketing budgets amid declining consumer spending, potentially leading to slower ad revenue growth for the platform, which relies heavily on U.S. advertisers to monetize its 73 million daily active users as reported in recent quarters.
• Exposure to Evolving Content Moderation Regulations: Reddit operates under increasing regulatory scrutiny in key markets, facing pressures from evolving laws like the EU’s Digital Services Act, which mandates stricter content moderation and could impose fines up to 6% of its annual revenue if non-compliant as of June 2025, necessitating significant investments in moderation tools and personnel that may impact profitability and operational efficiency.
• Volatility in Investments for AI-Driven Features: Reddit’s ongoing investments in AI to enhance user experience and content moderation, such as improving subreddit recommendations and combating misinformation, are subject to cost volatility due to rising expenses in AI infrastructure and talent acquisition, which could pressure margins and financial stability if these initiatives fail to deliver expected user growth or engagement improvements amidst competitive pressures in 2025.

Noted below are the details of support and resistance levels provided in our previous report:

Relative Valuation (Price/Earnings based relative valuation):

RDDT’s Daily Chart

Considering the current trading levels, volatile macro environment, lower intrinsic value as per P/E relative valuation, tariffs uncertainties, resistance 1 attainment, and risks associated, a ‘Sell’ rating is assigned to the “RDDT” at the current market price of USD 113.48, as of June 02, 2025 at 06:40 AM PDT. 

Note: This report may be updated with details around fundamental and technical analysis, price/ chart in due course, as appropriate

Note 1: Past performance is not a reliable indicator of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance level is June 02, 2025. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Note 4: Target Price refers to a price level that the stock is expected to reach as per the relative valuation method and or technical analysis taking into consideration both short-term and long-term scenarios.

Note 5: ‘Kalkine reports are prepared based on the stock prices captured either from the New York Stock Exchange (NYSE), NASDAQ Capital Markets (NASDAQ), and or REFINITIV. Typically, all sources (NYSE, NASDAQ, or REFINITIV) may reflect stock prices with a delay which could be a lag of 15-20 minutes. There can be no assurance that future results or events will be consistent with the information provided in the report. The information is subject to change without any prior notice.’