Online community platform Reddit is set to announce its earnings results this Thursday after the market close. Investors and analysts are keenly awaiting the release to see how the platform has performed in the recent quarter.
In the previous quarter, Reddit surpassed analysts’ revenue expectations by 6.3%, reporting a total of $584.9 million in revenue, reflecting a remarkable year-on-year growth of 67.9%. The company demonstrated strong operational performance, with its earnings before interest, taxes, depreciation, and amortization (EBITDA) guidance for the upcoming quarter also exceeding analysts’ forecasts. Reddit reported 51.6 million daily active users, which marks a 7.1% increase compared to last year.
For this upcoming earnings report, analysts project that Reddit’s revenue will grow by 56.1% year-on-year, reaching approximately $667.5 million. While this represents a slowdown from the 71.3% growth seen in the same quarter last year, adjusted earnings are expected to hit $1.45 per share.
Interestingly, analysts have maintained their estimates over the last month, indicating confidence in the company’s ongoing performance as it approaches its earnings announcement. Historically, Reddit has a strong track record, consistently beating Wall Street’s revenue estimates by an average of 10% over the past two years.
In the broader consumer internet landscape, peers have also shown promising results, providing clues for what might be expected from Reddit. Meta Platforms recently reported a 23.8% increase in revenue, outperforming estimates by 2.5%, while Take-Two Interactive posted a revenue growth of 24.9%, exceeding expectations by 7.5%. Notably, Meta’s stock surged by 10.4% following these results.
Despite broader market concerns such as potential tariffs and corporate tax cuts, the consumer internet sector has seen mixed performance. On average, stocks in this group have declined by 13.4% over the last month, with Reddit notably down 32.1%. Heading into earnings, the average analyst price target for Reddit stands at $252.39, contrasting with its current share price of $165.51.
As Reddit gears up for its earnings announcement, many will be looking to see if the company can continue its trend of strong performance amidst a challenging market environment. This anticipation reflects broader sentiments of hope for the platform’s future growth and market recovery.