Reddit’s shares rallied 14% in extended trading after the company released its quarterly results for the first time since its IPO in March. The company reported a loss per share of $8.19, which came in better than the expected $8.71 loss. Revenue was $243 million, higher than the $212.8 million expected by analysts. Revenue climbed 48% from the previous year, with $222.7 million in ad revenue, showing a 39% year-over-year increase.
Digital advertising companies have seen growth again as brands increase spending after coping with inflation in 2022. Meta’s ad revenue jumped 27% in the first quarter, with Amazon and Google parent Alphabet reporting 24% and 13% growth, respectively. Reddit reported a net loss of $575.1 million, driven primarily by stock-based compensation expenses and related taxes of $595.5 million, largely due to IPO charges.
For the second quarter, Reddit expects revenue between $240 million to $255 million, surpassing the $224 million estimated by analysts, with estimated growth of around 32%. The company, founded in 2005 by Alexis Ohanian and Steve Huffman, began trading on the New York Stock Exchange in March under the ticker symbol “RDDT”. Initially priced at $34 per share, Reddit’s IPO valued the company around $6.5 billion, reaching a private market valuation of $10 billion during a red-hot tech valuation period in 2021.
The stock climbed past $58 in after-hours trading before coming back slightly. If the stock closes above $57.75, it would be at its highest price since its fourth day of trading in March. The company reported 82.7 million daily active users for the first quarter, exceeding the expected 76.6 million. Average revenue per user worldwide increased by 8% to $2.94 from $2.72 a year ago. Reddit will hold its first quarterly call with investors at 5 p.m. ET.
Reddit’s CEO, Steve Huffman, sees this as the beginning of a new chapter for the company as they work towards building the next generation of Reddit. With the recent increase in revenue and user growth, Reddit remains a prominent player in the digital advertising space, showing promising potential for future growth and profitability.Following the positive quarterly results, Reddit’s stock price surged in after-hours trading, reflecting investor confidence in the company’s performance and potential for growth in the future.
