Reddit Stock Jumps on surprise Profit

Reddit Stock Jumps on Surprise Profit, Buoyant Outlook

KEY TAKEAWAYS

1.Reddit shares are surging 24% in premarket trading Wednesday after the social media firm posted its first quarterly profit as a public company with higher-than-estimated results and a rosy fourth-quarter outlook.

2.Reddit posted third-quarter revenue of $348.4 million, up 68% from the same period last year and beating Visible Alpha estimates.

3.It reported a third-quarter net profit of $29.9 million, or 16 cents per share, versus estimates. of a net loss of $17.7 million, or 10 cents per share.

4.For the fourth quarter, Reddit is forecasting revenue in the range of $385 million to $400 million.

Reddit (RDDT) shares are surging 24% in premarket trading Wednesday after the social media firm posted its first quarterly profit as a public company with higher-than-estimated results and a rosy fourth-quarter outlook.

Reddit, which went public on the New York Stock Exchange (NYSE) in March, posted third- quarter revenue of $348.4 million, up 68% from a year ago and surpassing the $312.2 million. expected by analysts polled by Visible Alpha. It reported a third-quarter net profit of $29.9 million, or 16 cents per share, versus estimates of a net loss of $17.7 million, or 10 cents per share.

For the fourth quarter, Reddit is forecasting revenue in the range of $385 million to $400 million and adjusted EBITDA of $110 million to $125 million.

"It was another strong quarter for Reddit and our communities as we achieved important milestones, including new levels of user traffic, revenue growth, and profitability, Chief Executive Officer (CEO) Steve Huffman said.

Citi Notes Revenue Surge Due To Ad Growth

Citigroup analysts, who have a "buy" rating on the stock, noted that advertising revenue growth of 56% drove the higher-than-estimated sales jump.

"Advertising revenue was driven by growth in impressions delivered from higher growth users, more efficient ad load, and expansion of conversation placement ads, Citi said.

JPMorgan analysts raised their price target on the stock to $110 from $77, although they maintained a "neutral" rating.

"Reddit's Al partnerships with Google and OpenAl are a huge bonus right now, and while they. contributed a good deal to this quarter's revenue, they're like training wheels on a bike - good for stability, but they won't fuel long-term growth," said Jeremy Goldman, senior director of briefings at Emarketer.

Reddit expects fourth-quarter revenue to be between $385 million and $400 million, compared with analysts' average estimate of $357.9 million, according to data compiled by LSEG.

The company reported a profit per share of 16 cents for the third quarter, compared with a loss of 13 cents a year earlier. Analysts, on average, had expected a loss of 7 cents per share.

Revenue rose 68% to $348.4 million in the quarter, beating analysts estimate of $312.8 million.

The company's daily active unique visitors increased 47% to 97.2 million in the third quarter ended Sept. 30, while its global average revenue per user (ARPU) increased 14% to $3.58.

The company reported a profit per share of 16 cents for the third quarter, compared with a loss of 13 cents a year earlier. Analysts, on average, had expected a loss of 7 cents per share.

Revenue rose 68% to $348.4 million in the quarter, beating analysts estimate of $312.8 million.

The company's daily active unique visitors increased 47% to 97.2 million in the third quarter ended Sept. 30, while its global average revenue per user (ARPU) increased 14% to $3.58 .