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Reddit’s Financial Moves: Earnings & Legal Hurdles

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Written by Timothy Sykes Reviewed by Jack Kellogg Fact-checked by Ellis Hobbs
Updated 8/1/2025, 11:32 am ET 8/1/2025, 11:32 am ET | 4 min 4 min read
Reddit’s Financial Moves: Earnings & Legal Hurdles Thumbnail

Reddit Inc.’s stocks have been trading up by 20.78 percent amid speculation of an upcoming promising feature release.

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Live Update At 11:32:06 EST: On Friday, August 01, 2025 Reddit Inc. stock [NYSE: RDDT] is trending up by 20.78%! Discover the key drivers behind this movement as well as our expert analysis in the detailed breakdown below.

Quick Financial Overview

Reddit recently reported a consensus earnings of 3 cents per share. In recent market activity, the stock opened at $182 and quickly climbed to $194, indicating market positivity. Despite a turbulent month, with swings from as low as $138.11 to closing highs of $194, the stock has shown resilient gains, particularly in the last trading sessions. Volatility seems to be a constant companion, with dynamic market play influenced by various corporate and external factors.

The key financial metrics of Reddit paint a complex picture: a PERatio of 33.25, evident challenges with a gross margin not specified, and a concerning negative pretax profit margin of -36.5%. The enterprise value stands notably at $27.71B. These figures place Reddit in a somewhat precarious position amongst competitors, particularly as they navigate recent legal and policy obligations.

Navigating Market Challenges

Legal Pressures Mounting

One notable legal challenge for Reddit involves claims of misinformation and failure to disclose adverse business operations, especially concerning user traffic declines due to Google’s search algorithm changes. With algorithm alterations affecting traffic and, consequently, advertising revenue, this presents substantial hurdles in maintaining profitability and attracting investment. The class action lawsuit could potentially lead to considerable financial repercussions if the claims are substantiated.

The complexity of the legal landscape is further amplified by ongoing cases against Reddit and peers such as HIMS, IRBT, and CNC. These lawsuits delve into allegations of deceptive promotional practices and overstated financial claims, which can erode investor confidence if public trust in the company’s transparency diminishes.

Earnings and UK Regulations

Compounding the legal troubles is the UK’s implementation of the Online Safety Act. This legislation compels tech companies, including Reddit, to employ advanced AI and face-scanning technologies to protect underage users from harmful online content. The requirement presents an overall strategic and operational challenge, with non-compliance resulting in substantial fines. Implementing these technologies requires not only immediate technical adjustments but also a reallocation of financial and human resources, potentially affecting profit margins and raising operational costs amidst an already stringent market scenario.

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Conclusion

In conclusion, while Reddit’s recent performance showcases its potential with a positive closing stock price and a modest earnings report, the future is punctuated with hurdles. Legal battles and stringent regulatory obligations require strategic maneuvering. The ability to maintain growth amidst these challenges will hinge on transparency, adaptation to regulatory landscapes, and innovative technology deployment. As millionaire penny stock trader and teacher Tim Sykes, says, “Small gains add up over time; focus on building wealth gradually, not chasing jackpots.” As Reddit navigates these paths, traders’ sentiment and stock movement will closely follow their journey through these economic and operational tests.

This is stock news, not investment advice. Timothy Sykes News delivers real-time stock market news focused on key catalysts driving short-term price movements. Our content is tailored for active traders and investors seeking to capitalize on rapid price fluctuations, particularly in volatile sectors like penny stocks. Readers come to us for detailed coverage on earnings reports, mergers, FDA approvals, new contracts, and unusual trading volumes that can trigger significant short-term price action. Some users utilize our news to explain sudden stock movements, while others rely on it for diligent research into potential investment opportunities.

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Tim Sykes

Head Writer at TimothySykes.com, Lead Mentor at the Trading Challenge
In his 20-plus years of trading, Tim has made $7.9 million. In his 15-plus years of teaching, Tim’s Trading Challenge has produced over 30 millionaire students. His philosophy emphasizes small gains and cutting losses quickly.
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* Results are not typical and will vary from person to person. Making money trading stocks takes time, dedication, and hard work. There are inherent risks involved with investing in the stock market, including the loss of your investment. Past performance in the market is not indicative of future results. Any investment is at your own risk. See Terms of Service here

The available research on day trading suggests that most active traders lose money. Fees and overtrading are major contributors to these losses.

A 2000 study called “Trading is Hazardous to Your Wealth: The Common Stock Investment Performance of Individual Investors” evaluated 66,465 U.S. households that held stocks from 1991 to 1996. The households that traded most averaged an 11.4% annual return during a period where the overall market gained 17.9%. These lower returns were attributed to overconfidence.

A 2014 paper (revised 2019) titled “Learning Fast or Slow?” analyzed the complete transaction history of the Taiwan Stock Exchange between 1992 and 2006. It looked at the ongoing performance of day traders in this sample, and found that 97% of day traders can expect to lose money from trading, and more than 90% of all day trading volume can be traced to investors who predictably lose money. Additionally, it tied the behavior of gamblers and drivers who get more speeding tickets to overtrading, and cited studies showing that legalized gambling has an inverse effect on trading volume.

A 2019 research study (revised 2020) called “Day Trading for a Living?” observed 19,646 Brazilian futures contract traders who started day trading from 2013 to 2015, and recorded two years of their trading activity. The study authors found that 97% of traders with more than 300 days actively trading lost money, and only 1.1% earned more than the Brazilian minimum wage ($16 USD per day). They hypothesized that the greater returns shown in previous studies did not differentiate between frequent day traders and those who traded rarely, and that more frequent trading activity decreases the chance of profitability.

These studies show the wide variance of the available data on day trading profitability. One thing that seems clear from the research is that most day traders lose money .

Millionaire Media 66 W Flagler St. Ste. 900 Miami, FL 33130 United States (888) 878-3621 This is for information purposes only as Millionaire Media LLC nor Timothy Sykes is registered as a securities broker-dealer or an investment adviser. No information herein is intended as securities brokerage, investment, tax, accounting or legal advice, as an offer or solicitation of an offer to sell or buy, or as an endorsement, recommendation or sponsorship of any company, security or fund. Millionaire Media LLC and Timothy Sykes cannot and does not assess, verify or guarantee the adequacy, accuracy or completeness of any information, the suitability or profitability of any particular investment, or the potential value of any investment or informational source. The reader bears responsibility for his/her own investment research and decisions, should seek the advice of a qualified securities professional before making any investment, and investigate and fully understand any and all risks before investing. Millionaire Media LLC and Timothy Sykes in no way warrants the solvency, financial condition, or investment advisability of any of the securities mentioned in communications or websites. In addition, Millionaire Media LLC and Timothy Sykes accepts no liability whatsoever for any direct or consequential loss arising from any use of this information. This information is not intended to be used as the sole basis of any investment decision, nor should it be construed as advice designed to meet the investment needs of any particular investor. Past performance is not necessarily indicative of future returns.

Citations for Disclaimer

Barber, Brad M. and Odean, Terrance, Trading is Hazardous to Your Wealth: The Common Stock Investment Performance of Individual Investors. Available at SSRN: “Day Trading for a Living?”

Barber, Brad M. and Lee, Yi-Tsung and Liu, Yu-Jane and Odean, Terrance and Zhang, Ke, Learning Fast or Slow? (May 28, 2019). Forthcoming: Review of Asset Pricing Studies, Available at SSRN: “https://ssrn.com/abstract=2535636”

Chague, Fernando and De-Losso, Rodrigo and Giovannetti, Bruno, Day Trading for a Living? (June 11, 2020). Available at SSRN: “https://ssrn.com/abstract=3423101”