Reddit shares jump on strong outlook
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The news: Reddit shares surged in after hours trading in New York after the social media platform surprised investors by forecasting a profit for the second quarter on the back of strong user growth and an uptick in the advertising market.
The numbers: Shares jumped more than 15% in extended trading despite the San Francisco-based company reporting a first quarter net loss of USD575.1 million ($872 million), largely due to stock-based compensation expenses incurred during its IPO in March.
For the second quarter, Reddit expects adjusted earnings between break-even and USD15 million, compared with analysts' estimate for a loss of USD18.2 million. It also forecast revenue to be between USD240 million and USD255 million, topping analysts' estimate of USD223.8 million.
The context: Reddit’s first results since its market debut follow strong earnings from rivals including Snap and fanned optimism that marketers are ramping up spending this year, after an ad market slump in 2023 caused by sticky inflation and an uncertain economic outlook. The company reported 82.7 million daily active users for its first quarter.
The platform, which operates more than 100,000 online forums, dubbed "subreddits," was founded by Alexis Ohanian and Steve Huffman, but was acquired by publishing giant Condé Nast in 2006 and then spun out as an independent company in 2011.
