Reddit (RDDT) is entering its adult years, and that may turn out well for investors.
“A lot of things are really starting to click,” Reddit co-founder and CEO Steve Huffman told Yahoo Finance on Thursday (video above).
The company this week reported its first results since going public in late March — and there was much to prove the bears wrong.
Daily active users increased 37% year over year to 82.7 million. Weekly active unique users rose 40% from the prior year.
Total revenue improved 48% to $243 million, nearly doubling the growth rate from the prior quarter, due to strength in advertising. The company delivered adjusted operating profits of $10 million, versus a $50.2 million loss a year ago.
Huffman declined to say when the company would be profitable on a net income basis, noting it’s a focus for the management team. Other areas of focus include rolling out a new user interface this year, introducing shopping capabilities, and searching for another artificial intelligence content licensing deal like the one with Google (GOOG, GOOGL).
“Results this quarter show that Reddit is on the early end of a number of positive inflections: Top-of-funnel growth is accelerating, the ad platform is in the early stages of being built to address lower funnel objectives, the data licensing business is in the very early stages of growth, and the company is entering a harvest period in costs after aggressively adding to headcount over the last couple years,” Deutsche Bank analyst Benjamin Black said in a client note.
For Reddit, the quarter was another win for 2024.
Initially expected to price its IPO in the $31 to $34 per share range, Reddit ended up pricing its IPO at $34 in late March, giving it a $6.4 billion valuation. The targeted valuation on a fully diluted basis was less than the $10 billion it fetched in a 2021 funding round.
The stock began trading at $47 per share and quickly shot past $53.
Shares finished their first day of trading on March 21 at $50.44.
The stock currently trades at around $50 and received a double-digit percentage boost after earnings this week. Reddit’s market cap is now roughly $8.1 billion.
The company was the first major social media IPO since Pinterest (PINS) debuted in 2019.
Despite being in business for almost 20 years, Reddit had never turned a profit before the first quarter. Last year the company saw sales rise 21% year over year to $804 million. The net loss clocked in at $90.8 million.
Amazon (AMZN) is also full steam ahead on AI, just like Reddit. In the latest episode of the Opening Bid podcast, Amazon’s AWS CEO Adam Selipsky took investors inside the tech giant’s AI plans. Listen in below.
Brian Sozzi is Yahoo Finance’s Executive Editor. He is also the host of the “Opening Bid” podcast. Follow Sozzi on Twitter/X @BrianSozzi and on LinkedIn. Tips on deals, mergers, activist situations, or anything else? Email brian.sozzi@yahoofinance.com. Are you a CEO and want to come on Yahoo Finance Live? Email Brian Sozzi.
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