Reddit shares jumped 14% in after-hours trading on Tuesday as the social media platform announced impressive financial results for the first quarter since going public in March. Despite a reported loss per share of $8.19, which was better than the $8.71 loss anticipated by analysts at LSEG, the company’s revenue exceeded expectations.
The company posted revenues of $243 million for the quarter, significantly higher than the predicted $212.8 million and marking a 48% increase from $163.7 million a year earlier. This growth was driven by a substantial 39% year-over-year increase in advertising revenue, which totaled $222.7 million.
Comparatively, other digital advertising giants also saw healthy revenue increases, though at slower rates than Reddit. Meta’s ad revenue rose by 27%, Amazon’s by 24%, and Google parent Alphabet reported a 13% increase.
Despite these gains, Reddit reported a net loss of $575.1 million for the quarter, largely due to stock-based compensation expenses and related taxes amounting to $595.5 million, primarily associated with its initial public offering.
Looking ahead, Reddit anticipates revenues between $240 million and $255 million for the second quarter, topping the $224 million forecast by analysts. This projection suggests an approximate 32% growth from the previous year’s $183 million.
Reddit, known for hosting millions of diverse forums, was founded in 2005 by Alexis Ohanian and Steve Huffman, who currently serves as CEO. Huffman expressed optimism about the company’s future, stating, “We see this as the beginning of a new chapter as we work towards building the next generation of Reddit.”
Since its IPO in March, where shares were priced at $34, valuing the company at around $6.5 billion, Reddit’s stock has seen considerable fluctuation. After peaking at $65.11 shortly after the IPO, the stock closed at $58 in after-hours trading on Tuesday.
The company also reported a rise in daily active users to 82.7 million for the quarter, surpassing the expected 76.6 million, with the average revenue per user worldwide climbing 8% to $2.94.
