Reddit's stock rallies ahead of second-quarter results

By James Rogers

The social-media platform reports its second-ever quarterly earnings as a public company after market close Tuesday

Shares of Reddit Inc. are up 4.4% in premarket trades ahead of the social-media platform's second-ever quarterly earnings report as a public company after market close.

The stock (RDDT) had rallied Monday, shrugging off the broader market weakness that has sent U.S. stocks tumbling, before ending the session down 1.3%.

In May, Reddit's first quarterly results as a public company sent the company's stock surging on better-than-expected revenue and a narrower-than-expected loss.

Related: Reddit shares soar on revenue beat, narrower-than-expected loss in first post-IPO results

During the first quarter, Reddit's daily active unique visitors were 82.7 million, up from 60.3 million year over year. Reddit defines a daily active unique as a user that the company can identify with a unique identifier who has visited a page on the Reddit website or opened a Reddit application at least once over a 24-hour period.

Last week, Raymond James reiterated its strong buy rating for Reddit and raised its price target to $70 from $65, citing "encouraging traffic trends and further progress against data monetization for GenAI models/services."

Analysts surveyed by FactSet are looking for second-quarter revenue of $254 million and a loss of 32 cents a share. The FactSet consensus for daily active unique visitors is 84.06 million.

Related: Reddit's stock rises on new partnership with NFL, NBA, MLB, PGA Tour and NASCAR

Of 15 analysts surveyed by FactSet, seven have a buy rating, seven have a hold rating, and one has an underweight rating for Reddit.

Reddit shares have risen 12.6% since their closing price on the day of the company's initial public offering on March 21. The IPO was priced at $34 a share, at the high end of its target range, and ended the first day's trading at $50.44.

Since reporting its first-quarter results, Reddit has been busy forging partnerships. In May, Reddit announced a deal with OpenAI to bring Reddit content to ChatGPT and give OpenAI access to Reddit's Data API, which lets developers harness Reddit data. OpenAI also became a Reddit advertising partner.

Related: Reddit-OpenAI deal highlights demand for social-media platform's data

Last month, the social-media platform announced a partnership program with five major U.S. sports organizations. The deals with the NFL, NBA, MLB, PGA Tour and NASCAR mean Reddit users will get access to video highlights from games and tournaments; question-and-answer sessions with players, known on Reddit as AMAs, or "Ask Me Anything"; and behind-the-scenes videos.

Last week, Reddit acquired creative-intelligence platform Memorable AI in a deal that it said would enhance advertisers' campaigns and impact.

-James Rogers

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08-06-24 0922ET

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