Shares of social network Reddit jumped nearly 19% in trading on October 31 after reporting revenue that rose by two-thirds and exceeded Wall Street forecasts. In addition, the online forum more than quadrupled earnings per share and gave a stronger-than-expected sales forecast for the current quarter.
Details
Reddit's stock price rose to $230.97 in trading on Oct. 31, an 18.8% increase from its closing price the day before and the highest since Sept. 30. The stock is now worth about 35% more than it was at the start of 2025.
Reddit's revenue for the quarter ended Sept. 30 rose 68 percent to $585 million, with analysts surveyed by Bloomberg predicting a $549 million result, Yahoo Finance noted.
Reddit's adjusted earnings per share reached $0.8. This is more than four times the result for the same period last year ($0.16), when the company first reported earnings after going public.
What else did the company report in the report?
The number of daily active unique users (DAU) grew 19% to 116 million, exceeding the forecast of 114 million, according to Bloomberg data. However, the audience growth rate continued to decline, a trend that worries some analysts, writes Yahoo Finance. Reddit recorded its fifth consecutive slowdown in DAU growth after a surge of more than 50% in the second quarter of 2024. This indicator is of key importance for the company, as it determines the effectiveness of monetization of its advertising business - the main source of revenue, writes Yahoo Finance.
The better-than-expected traffic performance in the third quarter was fueled by international audience growth. Reddit reported 64.4 million daily international users, up from a forecast of 62.2 million, according to data compiled by Bloomberg. Meanwhile, the number of users in the U.S. totaled 51.6 million, slightly behind the expected 51.9 million.
The social platform also provided a more optimistic outlook for fourth-quarter revenue and earnings than analysts had expected. Reddit expects sales between $655 million and $665 million. Even the lower end of that range is higher than the $636 million projected by Wall Street, according to data compiled by Bloomberg.
The company's fourth-quarter forecast for adjusted EBITDA - a measure of operating earnings before interest, taxes and depreciation and amortization - is about $280 million, above analysts' expectations of $258 million.
What are the analysts saying?
On October 31, after the publication of the company's report, Morgan Stanley raised the target price of Reddit shares from $230 to $250, keeping the recommendation to buy (Overweight rating - "above market"). Its estimation implies growth of securities by 29% relative to the closing price on October 30.
Earlier this week, Deutsche Bank increased its target price on Reddit shares from $205 to $245, maintaining a "buy" recommendation (Buy rating). Its target assumes growth of quotations by 26% relative to the last closing price.
Of the 30 analysts tracking the social platform's stock, most advise buying the securities (18 rating Buy and Overweight), ten are neutral (Hold) and only two recommend selling them.
This article was AI-translated and verified by a human editor
