What Happened?
Shares of online community and discussion platform Reddit (NYSE: RDDT) jumped 5.1% in the afternoon session after the company continued to rally on strong investor sentiment following its stellar second-quarter earnings report and optimistic future guidance. Last week, the social media platform posted revenue of $500 million, a 78% year-over-year surge that crushed analyst forecasts. Growth extended to its user base, as daily active unique visitors climbed 21%. The company also collected 47% more revenue per user. Following the results, Reddit issued an optimistic third-quarter revenue forecast, which prompted numerous Wall Street analysts to lift their price targets for the stock.
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What Is The Market Telling Us
Reddit’s shares are extremely volatile and have had 61 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 3 days ago when the stock gained 22.1% on the news that the company posted record-breaking second-quarter revenue and provided a strong forecast for the upcoming quarter. The social media platform's revenue jumped 78% year-over-year to $500 million, soundly beating Wall Street's expectations. Earnings per share landed at $0.45, more than doubling the forecasted amount. The company's user base also expanded, with daily active users growing 21% to 110.4 million. This performance was fueled by an 84% surge in advertising revenue and growth from data licensing deals. Looking ahead, Reddit projected third-quarter revenue well above consensus estimates, prompting analysts at Morgan Stanley to raise their price target on the stock.
Reddit is up 19.2% since the beginning of the year, but at $197.79 per share, it is still trading 12.2% below its 52-week high of $225.23 from February 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 $3,921.
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