Reddit stock price soars after social media player reports profit milestone
Reddit's stock price is surging after the social media player posted a rare profit.
Reddit on Tuesday reported net income of nearly $30 million for the third quarter, while its revenue of $348.4 million for the period topped analyst forecasts. Those figures were up from a loss of $7.4 million on sales of $207.5 million a year ago. Showing impressive customer growth, the business now has more than 97 million daily users, up 47% from a year ago.
A key factor behind Reddit's fast growth of late is artificial intelligence. In a letter to shareholders, Reddit co-founder and CEO Steve Huffman said a new AI-powered service that lets people translate posts between English, French, Spanish, Portuguese, Italian and German quadrupled its number of users. Reddit plans to roll out the feature to more than 30 countries over the course of 2025, he added.
"In 2024 so far, 'Reddit' was the sixth most Googled word in the U.S., underscoring that when people are looking for answers, advice or community, they're turning to Reddit," Huffman wrote. "We saw this play out in real time when the White House came to Reddit to share critical information during recent hurricanes, reaching people in the affected areas with timely updates."
Reddit was launched by Huffman, Alexis Ohanian and Aaron Swartz in 2005, only some 16 months after Mark Zuckerberg launched Facebook. But Reddit didn't go public until earlier this year and had never turned a profit, piling up hundreds of millions in losses even as its audience steadily grew.
Reddit's stock, which in March debuted on the New York Stock Exchange at $34 a share under the ticker symbol "RDDT," have since more than tripled in value and traded Wednesday afternoon at $113.50, up 39% on the day.
Today, the company's main source of revenue remains advertising, although it now also brings in money through financial agreements with companies like Google and OpenAI that train their generative-AI tools on Reddit's content.
Reddit also was in the black for one quarter in both 2021 and 2023, according to the company.
"Looking ahead, including the search experience on Reddit is a key part of our strategy," Huffman said Tuesday in a call with Wall Street analysts. "We want to ensure that all users have the best experience possible. This includes users coming to Reddit from external search and those searching directly on Reddit who are looking for recommendations on what to buy, what to watch, or what products or services are the best."