Reddit Stock Soars 15% After Impressive First Earnings Report

Reddit’s stock surged 15% to $57 per share in after-hours trading following its first earnings report since going public in March. The company’s debut quarter surpassed Wall Street’s expectations, with Reddit reporting $243 million in second-quarter sales, beating the forecast of $214 billion. Adjusted earnings came in at $10 million, exceeding expectations of -$23.9 million.

The spike in Reddit’s stock price came after it surpassed consensus analyst projections, with 82.7 million daily active users and an average revenue per user of $2.94. The company also provided strong guidance for the second quarter, expecting sales between $240 million and $255 million, and adjusted earnings between $0 and $15 million, well above analyst forecasts.

However, despite this strong performance, Reddit still has work to do to justify its roughly $9 billion valuation. The company is expected to bring in approximately $1.05 billion in revenue in 2024, which would give it a price-to-sales ratio of around 9, higher than about 90% of S&P 500 companies. Wall Street does not expect Reddit to turn a full-year profit until 2027.

Despite these challenges, Reddit’s bottom line growth appears steady. The company, founded in 2005, priced its IPO at $34 per share and has enjoyed sustained gains above its IPO price for the last six weeks. While other social media companies have struggled to turn a profit, Reddit’s strong performance in its first earnings report indicates potential for future success.