Reddit (NYSE:RDDT) has reached a significant milestone by posting a profit for the first time since going public in March 2024. The social media platform, known for its diverse user-generated content, has seen its stock more than double since its initial public offering (IPO). At the time of writing, Reddit’s stock was trading at $114.72, up over 40% through the day.
Reddit Reports a Profit for the First Time
In the third quarter, Reddit’s revenue was reported to be $348.4 million. This impressive growth is reflected in the stock’s performance, which reached a record high of approximately $114 at the time of writing.
Despite an estimated net loss of $8 million and earnings per share at a negative seven cents, the company is experiencing a surge in daily active users, which was reported at 97.2 million. The reported profit and revenue figures came as a surprise to the consensus forecast.
The company reported a profit of $29.9 million for the third quarter, a significant milestone and the first time the social media company has been a profitable company in its history of almost twenty years.
Reddit’s strategic partnerships, particularly in artificial intelligence (AI), have played a crucial role in its financial success. The company has secured significant AI training deals with tech giants Google (NASDAQ:GOOGL) (NASDAQ: GOOG) and OpenAI, each valued at approximately $200 million over the next three years.
By licensing its data to train AI models, such as Google Gemini and OpenAI’s ChatGPT, Reddit has opened a new revenue stream, with data licensing expected to contribute 15% of third-quarter revenue. Additionally, ad revenue, which constituted 90% of total revenue in the second quarter, is anticipated to grow, driven by dynamic product ads and collaborations with sports leagues like the NFL.
Reddit Stock Soars on Profitability News
Reddit’s stock has experienced a dramatic surge, with its price currently at $114.72, reflecting a 40.35% increase at the time of writing. The company’s market cap stands at $19.029 billion, fueled by strong earnings and a positive sales forecast. Reddit’s unexpected profit, bolstered by a 68% sales growth, has caught the attention of analysts, resulting in a “Strong Buy” recommendation.
The stock’s year-to-date return is an impressive 134.70%, significantly outperforming the S&P 500’s 11.77% gain over the same period. Analyst price targets range from a low of $59.00 to a high of $100.00, indicating confidence in Reddit’s continued growth trajectory.
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Neither the author, Tim Fries, nor this website, The Tokenist, provide financial advice. Please consult our website policy prior to making financial decisions.
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