🚀Last week, Reddit reported its Q1 FY26 earnings, and the stock jumped 13% post-earnings.

 💰At The Pragmatic Optimist, we have been building a small position in Reddit stock for our portfolio since the end of February 2026.

At a fundamental level, we liked the strength in the company’s user growth, along with its accelerating Advertising revenue that benefited from rising ad impressions and ad pricing.

Plus, when it came to valuation, Reddit was trading at par with Meta in February, even though Reddit’s earnings were projected to grow 3x faster over the next several years.

In Reddit’s latest earnings, revenue massively beat expectations, growing at an almost similar rate as the previous quarter at 69% YoY, with advertising revenue jumping 74% and contributing close to 95% of Total Revenue, as a result of higher ad impressions and pricing (similar to Meta). This is the case, as the company continues to see growing adoption of the ad tools like Dynamic Product Ads and Max campaigns.

While Adjusted EBITDA and Net Income margin declined sequentially, they were both up 1000+ and 2400+ basis points on a year-over-year basis.

Meanwhile, the company continues to expand internationally with growing revenue contribution while investing in the user experience by modernizing search, which is drawing even higher engagement and ad spend on the platform.

You can find our updated conviction score on Reddit, along with our forward investment plans in the company in the AI Stock Tracker 2.0.

📌Note, The Pragmatic Optimist Portfolio has delivered 18% returns since March 1, hugely outperforming QQQ and AIQ. On a YTD basis, our portfolio is up 8%.

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