Shares of Reddit (RDDT) soared over 40% on Wednesday after the social media giant delivered third-quarter results that outpaced Wall Street’s expectations by a wide margin.
Reddit reported a 68% surge in revenue to $348 million, a notable jump from analysts’ estimates of $313 million. In an unprecedented shift, the platform swung to profitability, recording earnings of $0.16 per share compared to a loss of $0.13 in the same quarter last year. Reddit’s share price, which has seen a staggering 146% gain since its March IPO, is now trading at more than three times its IPO price of $34.
Driving this exceptional growth is Reddit’s increasing advertising revenue, up 56% year-over-year, fueled by a substantial uptick in daily active users and user engagement. Active user counts rose 51% in the U.S. and 44% internationally, and average revenue per user (ARPU) increased across the board. Additionally, Reddit’s growing data licensing business saw a meteoric 547% increase, driven by agreements with Google and OpenAI to leverage Reddit’s data in training large language models.
Driving this exceptional growth is Reddit’s increasing advertising revenue, up 56% year-over-year, fueled by a substantial uptick in daily active users and user engagement. Active user counts rose 51% in the U.S. and 44% internationally, and average revenue per user (ARPU) increased across the board. Additionally, Reddit’s growing data licensing business saw a meteoric 547% increase, driven by agreements with Google and OpenAI to leverage Reddit’s data in training large language models.
Snap Surprises with Strong User Growth and AR Innovation
Snap Inc. (SNAP) also impressed investors with a robust earnings report, lifting its shares by 13% on Wednesday. The company reported a 15% revenue increase to $1.37 billion and earnings per share of $0.08, both well above expectations. Despite its primary advertising model, Snap has maintained its market relevance through continued innovation in artificial intelligence and augmented reality (AR), enhancing user engagement and fueling ad growth. This approach enabled Snap to boost its average revenue per user to $3.10, an increase of $0.24 over last year.
Average daily active users rose by 1 million to 11 million in Q3, reinforcing Snap’s steady user engagement and paving the way for sustained ad revenue growth. Snap’s investment in augmented reality technology, in particular, has expanded creative advertising options for brands, positioning the platform favorably as it ramps up AR-driven initiatives.
Average daily active users rose by 1 million to 11 million in Q3, reinforcing Snap’s steady user engagement and paving the way for sustained ad revenue growth. Snap’s investment in augmented reality technology, in particular, has expanded creative advertising options for brands, positioning the platform favorably as it ramps up AR-driven initiatives.
Future Prospects and Investor Optimism
Reddit’s Q4 guidance forecasts revenue in the range of $385 million to $400 million, far exceeding analysts' expectations and reinforcing its trajectory as a rapidly expanding player in digital advertising. The company’s data licensing partnerships, particularly those related to AI, are anticipated to provide additional revenue streams as more businesses seek high-quality data for training advanced models. Reddit’s Chief Financial Officer Andrew Vollero emphasized the platform’s profitable scaling strategy, attributing much of this growth to effective ad monetization and a widening user base.
Snap also received a vote of confidence with the announcement of a $500 million share repurchase program, signaling its leadership’s belief in the platform’s resilience despite recent volatility. Snap’s CEO Evan Spiegel pointed to AI and AR as central to its long-term growth, with plans to further develop these technologies to enhance user experience and advertising opportunities.
Reddit’s Q4 guidance forecasts revenue in the range of $385 million to $400 million, far exceeding analysts' expectations and reinforcing its trajectory as a rapidly expanding player in digital advertising. The company’s data licensing partnerships, particularly those related to AI, are anticipated to provide additional revenue streams as more businesses seek high-quality data for training advanced models. Reddit’s Chief Financial Officer Andrew Vollero emphasized the platform’s profitable scaling strategy, attributing much of this growth to effective ad monetization and a widening user base.
Snap also received a vote of confidence with the announcement of a $500 million share repurchase program, signaling its leadership’s belief in the platform’s resilience despite recent volatility. Snap’s CEO Evan Spiegel pointed to AI and AR as central to its long-term growth, with plans to further develop these technologies to enhance user experience and advertising opportunities.
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