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Shares of Reddit (RDDT) rose nearly 14% in recent trading, a day after the social media company reported earnings that exceeded analysts’ expectations.
Reddit posted earnings per share of $1.01, alongside revenue of $663.41 million—up nearly 70% year over year. Both figures were above analysts’ projections compiled by Visible Alpha.
Advertising revenue, which makes up the bulk of Reddit’s sales, increased 74% year over year. The company attributed the growth to higher ad impressions and pricing.
On the user side, Reddit reported daily active uniques of 126.8 million, up 17% year over year and just under 1 million above analysts’ calls.
Friday’s gains may reflect improving investor confidence in Reddit’s growth trajectory after a difficult start to the year for the stock.
JPMorgan analysts said they believe several of Reddit’s projects are likely to support ad revenue growth. They also expect the platform to renew its licensing deals with Alphabet’s Google and OpenAI over the next year, adding that the analysts believe the deals help drive new users to Reddit. JPMorgan further said it expects Reddit’s revenue and profits to continue growing.
Deutsche Bank analysts pointed to Reddit’s investments in its workforce and AI efforts as potential drivers of improved recommendations and user engagement. They also wrote that Reddit has “significant scope” to increase ad spending by rolling out ads in more countries, among other strategies.
Even after Friday’s rally, Reddit shares remain down nearly 30% since the start of the year, following earlier pressure tied to broader concerns about AI-driven disruption and competition.
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