What Happened?
Shares of online community and discussion platform Reddit (NYSE: RDDT) jumped 13.7% in the afternoon session after the company reported third-quarter results that significantly beat Wall Street's expectations and provided a strong forecast for the fourth quarter. The social media company's revenue rose 67.9% year-over-year to $584.9 million, surpassing analysts' estimates of $550.4 million. Earnings also impressed, coming in at $0.80 per share, well above the $0.52 that experts had predicted. This growth was supported by a massive 141% year-over-year increase in domestic daily active visitors, which reached 116 million. Looking ahead, the company projected fourth-quarter revenue of around $660 million, also above market expectations. Following the strong report, Wall Street sentiment was positive, as the company's results and optimistic guidance showcased strong business momentum.
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What Is The Market Telling Us
Reddit’s shares are extremely volatile and have had 65 moves greater than 5% over the last year. But moves this big are rare even for Reddit and indicate this news significantly impacted the market’s perception of the business.
The previous big move we wrote about was 7 days ago when the stock gained 7% on the news that the release of a cooler-than-expected inflation report fueled optimism for a potential interest rate cut from the Federal Reserve. The September Consumer Price Index (CPI) indicated a 3.0% year-over-year rise, slightly below the 3.1% forecast. Investors viewed this as a positive sign that inflation is moderating, increasing the probability of a more accommodative monetary policy from the central bank. A potential rate cut is seen as a significant catalyst for the tech sector, as lower borrowing costs can enhance profitability and encourage companies to reinvest in growth and innovation. This renewed confidence was reflected in the market's broad gains, with technology and semiconductor stocks leading the charge.
Reddit is up 31.6% since the beginning of the year, but at $218.36 per share, it is still trading 19.3% below its 52-week high of $270.71 from September 2025. Investors who bought $1,000 worth of Reddit’s shares at the IPO in March 2024 would now be looking at an investment worth $4,329.
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