Reddit () is expected to announce first quarter results on Tuesday, May 7 after the market close, with a conference call scheduled for 5:00 pm EDT. What to watch for:
INAUGURAL PUBLIC EARNINGS REPORT: Reddit’s earnings report after the bell will be its first quarterly earnings report since the social media company started trading publicly in March. SEC filings show Reddit’s 2023 revenue was $804M, representing 21% growth from 2022’s $666.7M Reddit’s net loss was ($90.8M) in 2023, narrowing from ($158.6M) in 2022.
Other publicly traded companies in the social media space include Meta Platforms (), Pinterest (), and Snap ().
‘ENCOURAGING’ USER TRENDS: Raymond James reiterated the firm’s Strong Buy rating on the stock ahead of the earnings report, citing its “encouraging” user trends and demand for its data to train generative AI models. Bank of America, which has a Neutral rating on the stock, anticipates a 30% increase in Reddit’s first-quarter revenue compared to the prior year, especially given its data licensing agreement with Google ().
EARLY END OF POSITIVE INFLECTIONS: Deutsche Bank, which has a Buy rating on Reddit, thinks Reddit is on the early end of a number of positive inflections, saying its top-of-funnel growth is accelerating, the advertising platform is in the early stages of being built to address lower-funnel objectives, and the data licensing business is in the very early stages of growth. It believes the company has an accelerative user growth profile, upside potential from ad technology, and best-in-class margin expansion potential off a low base.
AD SPEND CHECKS: On April 29, OTR Global initiated coverage of Reddit with a Positive view, stating that its checks found that advertisement spending on Reddit at least met expectations for North American advertising sources during Q1.
OTHER ANALYST COMMENTARY: With engagement trends improving, monetization ramping and EBITDA margins expanding, Reddit is well positioned to continue growing its share of users time and advertiser budgets, Citi said. Loop Capital said Reddit had stronger user and revenue growth than its social media peers last year, and this trend should continue in 2024. Needham believes Reddit’s library of 18 years of human conversations, updated daily, is increasingly valuable for training large language models and for “social listening” for brands. Reddit has a “unique platform for authentic human interactions based on passions, interests, and questions that is early in both its user growth and monetization, JMP Securities said.More By This Author:
