Reddit Shares Surge After Exceeding Q3 Earnings Expectations

Bassyonni

ago 6 hours

Reddit Shares Surge After Exceeding Q3 Earnings Expectations

The recent earnings report from Reddit has prompted a notable movement in its stock prices. Following the release of its third-quarter fiscal results for 2025, shares of Reddit (RDDT) saw a slight increase in after-hours trading.

Q3 Earnings Overview

Reddit reported an impressive earnings per share (EPS) of $0.80, surpassing analysts’ expectations of $0.53. Year-over-year, sales have risen by 68%, totaling $585 million, which also exceeded the anticipated $549.12 million.

User Growth Concerns

Despite the strong financial results, investor focus shifted to the slowing user growth within Reddit’s key U.S. market. The number of logged-in daily active users increased by only 7%, reaching 23.1 million. This marks a decline from the 12% growth experienced in the previous quarter.

Conversely, Reddit’s global user engagement showed positive trends. The total daily active uniques (DAUq) rose by 19% year-over-year to 116 million, surpassing analyst predictions of 114 million. Below are the specifics of user growth:

Logged-in DAUq worldwide: 50.2 million (14% increase)
Logged-out DAUq: 65.8 million (24% increase)

Revenue Insights

Reddit’s earnings report revealed an average revenue of $5.04 per user, exceeding the expected $4.82. The breakdown of revenue sources includes:

U.S. revenue: $480 million (greater than expected $445 million)
International sales: $105 million (slightly above $104 million forecast)
Other revenue (data licensing): $36 million (up 7% year-over-year)

Future Projections

Looking ahead, Reddit is optimistic about the fourth quarter. The company anticipates revenue between $655 million and $665 million, significantly higher than the Wall Street projection of $638 million. Adjusted earnings are expected to fall between $275 million and $285 million, compared to the estimate of $259 million.

Stock Outlook

Regarding Reddit’s stock performance, analysts maintain a Strong Buy consensus on RDDT. The ratings include 16 Buys, eight Holds, and no Sells over the past three months. Additionally, the average price target for RDDT stands at $237.87 per share, indicating a potential upside of 22.4%.

As estimates may fluctuate following this earnings report, investors are encouraged to stay informed about developments regarding RDDT stock at El-Balad.