Reddit (RDDT) could be ramping up its M&A activity this year

In an earnings call last week in which it reported a big fourth quarter beat, Reddit, Inc. (RDDT) executives indicated that they could be looking to make further strategic acquisitions this year, with adtech possibly being a focus of its M&A activity.

Reddit CFO Drew Vollero said during the call that the company will "look to do M&A where it makes sense, both tuck-ins and more scaled opportunities."

The "scaled opportunities" refers to bringing in a startup or other businesses who can leverage Reddit's scale to increase the reach of its product or else help further expand the company's user base.

Vollero added that Reddit will be "looking to buy capabilities, technologies, and companies."

Later in the call, he sought to put context behind how the company could approach pursuing possible mergers and acquisitions.

"I probably wouldn't overthink the scaled opportunities," Vollero said. "I would just look at it as sort of a spectrum of opportunities. We're looking at capabilities."

Reddit co-founder and CEO Steve Huffman noted that folding in other businesses into its company has been "one of the secrets of our success on the revenue side."

"We're looking at companies, we're looking at technologies," he said. "I think we've been successful here tucking in a number of technologies."

When it comes to "tucking in" technologies through acquisitions, Huffman said the adtech team "has done an outstanding job in how they've been able to really kind of drive our business."

"One of the ways is they tuck in technologies rather than build it themselves," he said. "Saves us six months to market, saves us 12 months to market, and you have a proven product. So we have been able to kind of tuck things in successfully, particularly on the adtech side, that's really helped us in the monetization journey."

While Reddit is putting a lot of focus on continuing to grow its surging ad business, Huffman indicated that the company could be looking at acquisitions in other areas, saying "we're not ruling anything off the table."

Reddit has become a digital media powerhouse

But advertising makes up the lion's share of Reddit's revenue. The company reported $726 million in revenue for Q4, with $690 million coming from ads.

The $690 million represented a 75% year-over-year (YoY) increase. The company noted that its advertising revenue grew by at least 60% for each quarter of 2025.

For the full year, Reddit's ad revenue was $2.1 billion, the first time it's topped $2 billion in annual ad revenue. It was good for 74% YoY growth.

The reported $1.24 earnings per share for Q4 topped Wall Street's expectations of $0.94. Its $726 million in revenue also beat analyst expectations of $667.1 million.

In a client note on Friday, Truist analyst Youssef Squali maintained his Buy rating and raised his price target to $275 from $270, calling Reddit "one of the fastest growing/most profitable stories within Digital Media today."

"Despite the rise of Gen AI, Reddit remains the platform for authentic human conversations with several initiatives sustaining its superior growth and share gains," Squali said, pointing to the company's AI-powered search engine, its dynamic product ads and automation among those initiatives.

Meanwhile, Needham analyst Laura Martin on Monday called Reddit the firm's "top pick" for 2026, citing "execution excellence," which has led to 60% revenue growth over the past six quarters. She also noted the difficulty competitors will have "in replicating a human community like RDDT today," which in turn "creates a deep moat."

Martin said that Reddit has developed a strong strategic position "with 100% human-created content, which becomes more differentiated and valuable as LLM bots multiply."

Despite its strong 2025 performance, Reddit's stock has plummeted 38.6% to start the year.