New York – Reddit’s stock saw a significant increase of up to 5% on Wednesday following the company’s optimistic outlook in its first-ever quarterly earnings report. The social media platform announced expectations of better-than-anticipated sales growth and advancements towards profitability in the current quarter.
According to Reddit’s latest report, the company foresees second-quarter revenue ranging from $240 million to $255 million, surpassing Wall Street’s projections of $228 million. Additionally, Reddit anticipates adjusted EBITDA in the current quarter to fall between $0 and $15 million, contrasting with the Street’s estimated loss of $13 million.
With daily active users at 82.7 million, up 9% from the previous quarter and exceeding analysts’ forecasts, Reddit’s performance post-IPO has been described as robust by Citi analyst Ronald Josey. Josey highlighted the platform’s improving engagement trends as a key factor driving its success.
Despite an initial surge in stock value after its public offering in late March, Reddit experienced a dip in share prices in the subsequent weeks, dropping from a high of approximately $74 per share to just under $40. Concerns surrounding the company’s valuation and future revenue potential contributed to the decline.
Nevertheless, Reddit’s report highlighted a trend observed in other stocks favored by retail traders, suggesting a positive outlook. Analyst Doug Anmuth from JPMorgan described Reddit’s recent quarter as “strong,” projecting continued favorable trends throughout the year and raising revenue estimates for 2024 and 2025 by 11% and 12%, respectively.
Anmuth maintained a Neural rating on Reddit’s stock while increasing his price target to $57 from $47, indicating that shares are currently considered to be “fairly valued.” The platform’s AI opportunities were also highlighted in the report as a potential growth area for the company.
Overall, Reddit’s performance in its first quarterly report post-IPO has demonstrated resilience and promising growth prospects, instilling confidence among analysts and investors alike. The positive outlook for sales growth and profitability, coupled with improving engagement metrics, positions Reddit as a key player in the evolving landscape of social media and technology.