Reddit CEO Steve Huffman embraces mascot Snoo, Reddit will begin trading on the New York Stock Exchange on March 21, 2024.
Timothy A. Clary | AFP | Getty Images
shares Reddit Shares of the social media company soared 35% on Wednesday, one day after it reported an unexpected profit from its business. Third quarter results and provided optimistic guidance.
Reddit’s third-quarter revenue rose 68% year-on-year to $348.4 million, higher than the $312.8 million expected by analysts surveyed by LSEG.
The company reported net income of $29.9 million, or a loss of 16 cents a share, compared with a net loss of $7.4 million, or a loss of 13 cents a share, a year earlier. LSEG analysts expect Reddit to post a loss of 7 cents per share in the third quarter.
Reddit said fourth-quarter revenue would be between $385 million and $400 million, above analysts’ average estimate of $357.9 million.
“It was another strong quarter for Reddit and our community as we achieved important milestones, including new levels of user traffic, revenue growth and profitability,” Reddit CEO Steve Huffman said in a press release.
In the third quarter, Reddit’s number of daily active unique users increased 47% year-over-year to 97.2 million, a user growth that underscored the company’s “impressive” performance, Citi analysts said on Wednesday. Analysts reiterated a buy rating and raised the stock’s price target to $120 from $70.
Analysts at JPMorgan said they believe the company is benefiting from structural improvements in its execution across users, products and monetization. They said they were encouraged by Reddit’s strong revenue growth, improved profitability and growth in daily active unique users.
“We expect to continue executing on advertiser scale, new ad formats/technologies (search, conversational ads, shopping ads) and on track to achieve (management’s) 40% LT Adj. Progress on EBITDA margin target.
Bernstein analysts got into the Halloween spirit on Wednesday, comparing Reddit’s third-quarter performance to “the true story of Dr. Jekyll and Mr. Hyde.” Analysts said the company felt like it was stuck and unable to grow before its IPO, but it has exceeded expectations since.
Analysts say: “Reddit looks like a company that is suddenly an AI winner, with ad revenue growing at an unprecedented rate, having a user growth cheat code on Translate + Google, and achieving years-long gains in a matter of months. Profit Target – That’s Dr. Jekyll “Now Dr. Jekyll is in charge. “
— CNBC’s Michael Bloom and Jonathan Vanian contributed to this report.
