Reddit's stock jumps 14% as the company reports a surge in revenue in its first earnings announcement.

Reddit's shares increased by 14% after the company reported a 48% rise in revenue to $243 million in its first earnings release since its IPO. Daily active users reached 82.7 million, and the company forecasted strong revenue growth for the next quarter.

KEY POINTS

• Reddit has published its first quarterly earnings since its IPO in March.
• The company's revenue for the first quarter was up 48%, reaching $243 million.
• Reddit's daily active users were reported at 82.7 million for the quarter.

Reddit's shares increased by 14% in after-hours trading on Tuesday, following the release of its first quarterly results since going public in March. The results included:

- Earnings per share: A loss of $8.19, which was better than the anticipated loss of $8.71 by LSEG.

- Revenue reached $243 million, exceeding expectations of $212.8 million by LSEG.

- Advertising revenue for the quarter was $222.7 million, marking a 39% increase year over year, outpacing the growth rates of its main competitors.

Digital advertising has begun to recover robustly as companies adjusted their budgets after cutting back during the inflationary period of 2022. For instance, Meta saw a 27% rise in ad revenue in the first quarter, Amazon reported a 24% increase, and Google's parent company, Alphabet, recorded a 13% rise.

Reddit posted a net loss of $575.1 million for the quarter, heavily influenced by $595.5 million in stock-based compensation expenses and related taxes, largely due to its recent IPO.

Looking ahead to the second quarter, Reddit anticipates revenues between $240 million and $255 million, which would exceed the $224 million analysts expect, according to LSEG. This guidance suggests a revenue growth of about 32% from the previous year's $183 million.

Reddit, established in 2005 by Alexis Ohanian and current CEO Steve Huffman, launched its shares under the ticker "RDDT" on the New York Stock Exchange in March. Initially priced at $34 per share, the company was valued at around $6.5 billion, a decrease from its $10 billion valuation in 2021. After trading, the stock reached $58 but later settled slightly lower. If the stock closes above $57.75 on Wednesday, it will be at its highest since late March.

Reddit's average revenue per user globally increased 8% year over year to $2.94, up from $2.72.

Source: CNBC