Investors show support for Reddit following strong earnings report

Reddit had a successful second-quarter earnings report, which resulted in a positive reaction from investors. After the bell on Thursday, the company announced its earnings, leading to a 12% surge in Reddit shares in after-hours trading. While Reddit reported earnings of $0.45 per share, falling short of analysts’ expectations of $0.69 per share, its revenue of $500 million exceeded Wall Street’s consensus of $426 million, showing a significant increase of 78% from the previous year. In May, Reddit had forecasted revenue for the second quarter to fall between $410 million and $430 million.

The advertising segment continued to be the main contributor to Reddit’s revenue, making up 93% of the total revenue in the second quarter. The advertising business brought in $465 million, registering an 84% increase from the previous year. Analysts are optimistic about Reddit’s potential as a valuable dataset for AI, which could potentially boost the company’s “other revenue” category in the future.

Daily active users on Reddit also saw a positive trend, with numbers reaching 110.4 million, surpassing expectations and showing a significant 21% increase from the previous year’s 91.2 million users. The growth in lurkers, who make up more than half of the total user base, saw a 24% increase, outpacing the 17% growth in logged-in visitors. Reddit has attributed fluctuations in unique visit totals to Google’s algorithm in the past.

Looking forward, Reddit anticipates further growth, with sales projected to reach between $535 million and $545 million in the third quarter. This forecast is well above analysts’ expectations of $473 million, indicating a positive outlook for the company’s future performance.