Reddit's users wobble while pharma ads grow 50%: what the October 29 print decides
Wedbush sees daily-user pressure into the October 29 report; Reddit's pharma desk sees a category compounding above 50% because AI models scrape the site for health answers. One stock, two readings of the same quarter.
Vincent Jiang · 3 min read
Reddit−3.60% — Reddit, down 3.60 percent today reports Q3 earnings on October 29, and the two loudest signals before the print point in opposite directions 21. Wedbush flagged near-term pressure on daily active users heading into the quarter 2, while Reddit's own pharma partnerships head, Jess Calef, said pharmaceutical revenue and spend on the platform grew more than 50% year over year as of Q2 1. The stock fell 1.56% on October 23 as investors weighed which number will govern 2.
The bear camp: the audience stopped growing
The user case is simple. Reddit reported 130.3 million daily active uniques in Q2, up 18% year over year, but search referral traffic turned irregular and declining toward the end of the quarter, and shares are down roughly 36% this year, underperforming Meta−1.36% — Meta, down 1.36 percent today, Pinterest−2.75% — Pinterest, down 2.75 percent today and Snap 3. Wedbush expects that pressure to show up in the Q3 user count 2. If the audience stalls, the bear argument runs, the ad business cannot keep compounding forever.
The bull camp: ads are growing faster than users
The revenue case rests on pricing and category mix, not headcount. Q2 international revenue rose 84% year over year and global ARPU climbed 36% to $6.18 3. Management guides Q3 revenue to $860–870 million, about 48% growth at the midpoint 3. Pharma is the fastest-growing slice: Calef put pharma spend and revenue above 50% year-over-year growth as of Q2, with health conversations accruing more than 36 billion views over the past year and 61% of US health-information seekers using Reddit as a "final check" before taking action 1.
Pharma ad spend and revenue are growing faster than Reddit's audience
- Estimate
Data
| Value | |
|---|---|
| Intl revenue (Q2) | 84 |
| Pharma ad spend (estimate) | 50 |
| Global ARPU | 36 |
| Daily actives | 18 |
The reason drugmakers pay is machine-readable. LLMs like Claude, ChatGPT and Gemini scrape Reddit's text to answer health queries, so pharma brands buy placements to sit in what MM+M calls AI's circulatory system 1. Reddit built MLR-compliant ad placements with agencies CMI Media Group and Compas, and Genentech shaped a caregiver campaign by analyzing conversations across more than 700 health-related subreddits 1. Calef's pitch: AI does not replace Reddit, and Redditors who use AI go 46% deeper on the platform than those who do not 1.
The cross-examination
Both camps cite the same Q2 report 1. The bears cite the user line; the bulls cite the revenue line; the pharma claim, above 50% growth, is a company figure delivered at an industry event, not an audited segment disclosure 1.
What resolves it is not argument but arithmetic on October 29: whether daily uniques accelerate or decelerate against the 18% Q2 rate, and whether revenue beats the $886 million consensus 23. High-margin category growth on a flat user base is a real business; it is also a business with a ceiling, and the Q3 print is where investors find out how far off that ceiling is 23.
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