Shares of social media platform Reddit (RDDT) fell in after-hours trading despite reporting solid second-quarter results. Sales increased by 53.6% year-over-year, with revenue hitting $281.2 million. This beat expectations of $253.9 million.
Ad revenue made up $253.1 million of sales, which was a 41% jump from the previous year. This growth was driven by user traffic, as Daily Active Uniques (DAUq)—unique users that visited the website/app at least once during a 24-hour period—came in at 91.2 million. This equates to a 51% jump from Q2 2023.
Furthermore, earnings per share came in at -$0.06, which smashed analysts’ consensus estimate of -$0.32 per share. It’s worth mentioning that this loss is mostly attributable to stock-based compensation (a non-cash expense). In fact, free cash flow was positive at $27.2 million.
Looking forward, management now expects revenue and adjusted EBITDA for Q3 2024 to be in the ranges of $290 million to $310 million and $40 million to $60 million, respectively. For reference, analysts were expecting $282.3 million in revenue.
Is RDDT a Buy or Sell?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on RDDT stock based on eight Buys, six Holds, and one Sell assigned in the past three months, as indicated by the graphic below. After a 23% post-IPO rally, the average RDDT price target of $66.21 per share implies 16.71% upside potential. However, it’s worth noting that estimates will likely change following today’s earnings report.
