Reddit surprises investors: first profit causes share price to rise!

Reddit surprises investors: first profit causes share price to rise!

The stock market year 2024 was a brilliant success for Reddit. After the company went public on the NYSE in March, its price initially rose from $34 in its IPO to a staggering $163.63, an impressive increase of over 250 percent finance.net reported. Many analysts who were initially skeptical have now adjusted their price targets upwards and see potential up to $206. However, the surprise came when the company first reported earnings in the third quarter of 2024—$0.16 per share, a notable turnaround from the year-ago loss of -$0.13.

Increased sales and impressive user growth

Reddit also posted an impressive revenue increase to $348.35 million from $207.5 million in the same quarter last year, beating analysts' expectations of just $312.1 million Investment Week. This increase in revenue is due to a diversification of business strategies, including new advertising models and subscription-based services. The number of weekly active users also increased by a remarkable 53 percent to 365 million, highlighting the loyalty and commitment of the community.

The positive news has boosted share prices, with shares rising nearly 20 percent in after-hours trading, reaching a record high of $97.99. Still, the question remains whether Reddit can generate sustained profits or whether this success is just a one-time event. Analysts warn that heavy reliance on advertising revenue could be risky during economic uncertainties. The coming quarters will have to decide the actual stability of Reddit's growth.