Reddit Surges 14% After Strong Q3 Earnings and Upbeat Forecast

Reddit’s stock price jumped 14% after the social media company reported strong Q3 earnings and issued an upbeat forecast. The company’s revenue surged 68% year-over-year to $585 million, beating estimates of $546 million. Earnings per share (EPS) also exceeded expectations, coming in at 80 cents versus an estimate of 51 cents.

Key Highlights

• Revenue Growth: Reddit’s revenue grew 68% year-over-year to $585 million, driven by strong advertising growth and user engagement.
• User Growth: Daily active users (DAUs) increased 19% year-over-year to 116 million, surpassing estimates of 114 million. Daily active unique users rose 7% to 23.1 million.
• Advertising Growth: Nine of Reddit’s top 15 advertiser verticals grew more than 50%, with the company seeing strong demand for its ad products.
• Partnerships: Reddit has attracted more users from Google and generated advertising dollars from account creation. The company also has data licensing partnerships with Google and OpenAI, which grew 7% year-over-year to $36 million.

Future Outlook

Reddit’s Q4 revenue forecast is between $655 million and $665 million, topping the $638 million estimate from Wall Street. The company is investing in automation to improve return on advertising spending, which is expected to drive further growth.

CEO Steve Huffman highlighted the company’s continued progress in ad and platform initiatives, saying, “We see a long runway for growth across both active advertisers (+75% y/y in 3Q) as well as greater penetration within existing advertisers.”

Analyst Reaction

Morgan Stanley analyst Brian Nowak wrote, “These results speak to the company’s continued progress across its ad and platform initiatives. We see a long runway for growth across both active advertisers… as well as greater penetration within existing advertisers.”

Conclusion

Reddit’s strong Q3 earnings and upbeat forecast have driven the stock price up 14%. The company’s focus on advertising growth, user engagement, and partnerships has paid off, positioning it for continued success in the future. With a strong outlook for Q4 and a growing user base, Reddit is well-positioned to capitalize on its momentum