Reddit Q3 Results: The social media platform impressed the Wall Street this week with its sky-rocketing revenue figures sending its shares soaring by more than 24 per cent
Reddit made a big hit on Wall Street after the social media platform announced its Q3 results. The shares of the social media company surged by more than 24 per cent in after-hours trading on Tuesday as Reddit posted a profit of 16 cents per share. This marked a turnaround from a loss of 13 cents per share in the corresponding quarter of the previous year.
What made the results even more impressive was that analysts had muted expectations for Reddit's profitability earlier.
In the September quarter period, Reddit's revenue surged by 68 per cent to reach $348.4 million, surpassing analysts' estimate of $312.8 million, according to Reuters. The forum platform also witnessed a 47 per cent surge in daily active unique visitors, bringing the total to 97.2 million in the quarter under review. Reddit's global ARPU (average revenue per user) witnessed a surge of 14 per cent, bringing the total figure to $3.58.
Since its listing earlier this year, Reddit's share price has skyrocketed to $81.74 on the New York Stock Exchange, experiencing an increase of more than 60 per cent.
And while word on the street is that AI deals have a lot to do with the company's positive trajectory, there is another factor at play.
Reddit has gained significantly from Google's search updates, which have elevated its content in search results. Besides it has also attracted new users to the platform. However, these new users, called logged-out users by Reddit, usually bring in less advertising revenue than logged-in users.
During a post-earnings call, CEO Steve Huffman stated that in 2025, the company plans to upgrade its search products by improving the results page, adding autocomplete features, and integrating large language models to make search results better.
It is also worth noting that earlier everyone was quite worried about the decreasing advertising revenue. However, Reddit's recent results points to a changing trend. Investors are confident that more advertisers will turn to the platform.