The stock of Reddit (RDDT) is surging 22% higher after the social media company reported third-quarter financial results and forward guidance that trounced Wall Street forecasts.
Reddit’s stock is trading near $100 U.S. after the company announced earnings per share (EPS) of $0.16 U.S., which was more than double the consensus expectation of $0.07 U.S.
Revenue in the quarter amounted to $348.4 million U.S., which surpassed the $312.8 million U.S. anticipated on Wall Street. Sales in Q3 were up 68% from a year ago.
Importantly, Reddit turned profitable during the July through September quarter, reporting net income of $29.9 million U.S. compared with a net loss of $7.4 million U.S. a year ago.
The company also reported that its daily active users grew 47% year-over-year in Q3 to 97.2 million, better than analyst estimates of 96.5 million.
Average revenue per user was $3.58 U.S. for the third quarter, which beat consensus estimates of $3.24 U.S.
This is Reddit’s third earnings report since the company went public in March of this year.
Management said Reddit is benefitting from Google search updates that push its content higher in results, bringing in a flood of new users to the social media platform that specializes in online discussion forums.
In terms of guidance, Reddit said it expects revenue of $385 million U.S. to $400 million U.S. for the current fourth quarter, ahead of the $357.9 million U.S. expected among analysts.
Earnings for Q4 will be in a range of $110 million U.S. to $125 million U.S., above forecasts of $85.2 million U.S.
Including today’s gain, Reddit’s stock has increased more than 70% since its initial public offering (IPO), lifting the company’s market capitalization to $13.56 billion U.S.
Reddit’s stock is currently trading at $99.49 U.S. per share.
