Reddit (RDDT) stock soared more than 40% to an all-time high Wednesday after the social media company posted its first profit as a publicly traded company and reported third-quarter revenue that beat Wall Street expectations. The total amount was 117 dollars.
Shares rose 42% to close at $116.
On Tuesday night, Reddit reported quarterly revenue of $348 million, up 68% from a year ago and beating Wall Street’s forecast of $313 million. Reddit’s fourth-quarter earnings outlook also exceeded expectations.
Adjusted earnings per share of $0.16 were below analysts’ expectations of $0.20, but Reddit reported its first profit since its $30 million IPO. The company reported a net loss of $10 million last quarter and a net loss of $7.4 million in the year-ago period.
Reddit was profitable twice before going public in 2021 and the fourth quarter of 2023, according to a regulatory filing in March.
Meanwhile, the platform’s user traffic hit an all-time high, with daily active users increasing by nearly 50% to more than 97 million.
A Reddit Inc. sign can be seen on the trading floor of the New York Stock Exchange ahead of Reddit’s IPO. (AP Photo/Yuki Iwamura, File) ・ASSOCIATED PRESS
The nearly 20-year-old company, whose lead investor is OpenAI’s Sam Altman, began trading in March in one of the hottest IPOs of 2024. Wednesday’s stock price jump made Altman’s stake in the company worth $1.4 billion (he owned about 12.2 million shares, according to a Feb. 21 filing with the Securities and Exchange Commission).
Reddit’s performance was driven by growth in ad sales, which increased 56% year over year in the third quarter. The platform’s AI licensing deals with Google (GOOG) and OpenAI worth at least tens of billions of dollars have also boosted profits, CEO Steve Huffman said on a call with investors Tuesday. , Reddit said it was “talking to people” about: New AI trading possibilities.
Analysts from Deutsche Bank (DB), Bank of America (BAC), JPMorgan (JPM), and Jefferies (JEF) raised their price targets on Reddit stock to $120 following the earnings report.
“RDDT has accelerated ad revenue growth for the fourth year in a row, highlighting early monetization opportunities and positioning the company for attractive growth even as user growth slows,” Jefferies analysts said in a note Wednesday. “This confirms our outlook for success.”
Ad revenue growth also boosted fellow social media platform Snap (SNAP), whose shares rose nearly 16% after Tuesday’s better-than-expected results.
CEO Evan Spiegel said on a call with investors late Tuesday that direct advertisers on the platform more than doubled in the third quarter from a year earlier. The company reported adjusted earnings per share of $0.08, compared to expectations of $0.05, and quarterly revenue of $1.37 billion, compared to the $1.36 billion expected by Wall Street analysts tracked by Bloomberg.
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