San Francisco, California – Reddit’s stock surged up to 5% on Wednesday following the release of its first quarterly earnings report. The company projects better-than-expected sales growth for the current quarter, along with advancements in profitability. Reddit anticipates second-quarter revenue to be between $240 million and $255 million, surpassing Wall Street’s estimates. Additionally, the social media platform forecasts adjusted EBITDA to range from $0 to $15 million, contrasting with the expected loss of $13 million.
In a notable milestone, Reddit reported a 9% increase in daily active users, reaching 82.7 million, outpacing analysts’ forecasts. Analyst Ronald Josey from Citi commended Reddit’s strong performance in the first quarter post-IPO, emphasizing sustained improvements in engagement metrics.
Despite a decline in Reddit’s stock value from a peak of $74 per share to below $40 following concerns about its valuation and future revenue streams, the recent earnings report showcases a positive trend for the company. Analysts, including Doug Anmuth from JPMorgan, view Reddit’s current market performance as robust but not excessively volatile. Anmuth revised revenue estimates for 2024 and 2025 upwards by 11% and 12%, respectively, indicating a positive outlook for the company.
Moreover, Anmuth maintained a Neural rating for Reddit’s stock and raised the price target to $57, highlighting that the current valuation aligns with the company’s market position. The report underscores Reddit’s potential for sustained growth, supported by recent positive developments in the market.
As Reddit continues to navigate the volatile stock market landscape, analysts and investors are closely monitoring the platform’s performance and future prospects. The company’s focus on enhancing user engagement and driving revenue growth remains critical for its long-term sustainability. Amidst market uncertainties, Reddit remains a key player in the evolving social media landscape, drawing attention for its innovative approach and strategic growth initiatives.
