Reddit share rise by 14% in afterhours trading on Tuesday after the social media company reported better-than-expected earnings. Reddit delivered upbeat revenue guidance for the current quarter, driven by strong user growth. The rise in share price was seen in extended trading after the company released quarterly results for the first time since its IPO in March.
Reddit’s earnings report
Here’s how the company did:
Reddit’s loss per share: $8.19. That may not compare with the $8.71 loss expected by LSEG
Reddit’s Revenue: $243 million vs. $212.8 million expected by LSEG
Revenue climbed 48% from $163.7 million a year earlier. The company reported $222.7 million in ad revenue for the period, up 39% year over year, which is a faster rate of growth than at its top competitors.
Reddit reported a net loss of $575.1 million. Reddit’s stock-based compensation expenses and related taxes were $595.5 million, primarily driven by charges due to the initial public offering (IPO).
Growth in digital ad companies
Digital advertising companies have started growing again at a healthy clip after brands reeled in spending to cope with inflation in 2022. Meta’s ad revenue jumped 27% in the first quarter, followed by 24% growth at Amazon and 13% growth at Google parent Alphabet.
Reddit’s revenue forecast
Reddit expects revenue of $240 million to $255 million IN Q2, topping the $224 million expected by analysts, according to LSEG. The midpoint of the guidance range suggests growth of about 32% for the Q2, up from $183 million from a year earlier.
The company reported 82.7 million daily active users for its first quarter, up from the 76.6 million expected by StreetAccount. Average revenue per user worldwide rose 8% to $2.94 from $2.72 a year ago.
Reddit’s valuation
Reddit, which hosts millions of online forums on its platform, was founded in 2005 by Alexis Ohanian and Steve Huffman, the company’s CEO.
“We see this as the beginning of a new chapter as we work towards building the next generation of Reddit,” Huffman said in a release Tuesday.
Reddit began trading under the ticker symbol “RDDT” on the New York Stock Exchange in March. The company priced its IPO at $34 per share, which valued the company around $6.5 billion. When tech valuations were red hot in 2021, Reddit’s private market valuation reached $10 billion.
Reddit stock update
The stock climbed past $58 in after-hours trading on Tuesday before coming back a bit. Should Reddit’s shares rise and close above $57.75 on Wednesday, they would be at their highest since March 26, the fourth day of trading. Reddit closed that day at $65.11.
