Reddit (RDDT) stock surged 5% on Wednesday following the company’s impressive first-ever quarterly earnings report. The social media giant announced better-than-expected sales growth for the current quarter, sending investors into a frenzy.
According to Reddit’s release on Tuesday, the company anticipates Q2 revenue to be between $240 million and $255 million, surpassing Wall Street’s estimates of $228 million. Additionally, Reddit expects adjusted EBITDA in the range of $0 to $15 million, a stark contrast to the Street’s prediction of a $13 million loss.
The company’s daily active users also saw a significant increase, reaching 82.7 million, up 9% from the previous quarter and exceeding analysts’ projections.
Citi analyst Ronald Josey praised Reddit’s performance, stating, “Reddit delivered a strong first quarter post its IPO, in our view. Importantly, we believe improving engagement trends are lasting.”
Following a rocky start post-IPO, Reddit shares plummeted from $74 to below $40 amid concerns about the company’s valuation and future revenue streams. However, the latest earnings report has reignited investor confidence in the platform.
JPMorgan analyst Doug Anmuth described Reddit’s performance as “strong,” leading to a modest increase in the stock price. Anmuth maintained a Neutral rating on the stock but raised his price target to $57, citing the company’s current valuation as “fairly valued.”
With Reddit’s AI opportunities on the horizon, analysts are optimistic about the company’s future growth potential. As the stock continues to climb, investors are eagerly watching to see if Reddit can sustain its momentum throughout the year.