Reddit CEO Steve Huffman stands on the floor of the New York Stock Exchange (NYSE) after ringing a bell on the floor setting the share price at $47 in its initial public offering (IPO) on March 21, 2024 in New York City.
Reddit 's stock popped 7% Friday after the company surpassed third-quarter estimates and signaled strong advertising growth.
The social media platform's revenues surged 68% from a year ago to $585 million, beating an LSEG estimate of $546 million. Earnings per share totaled 80 cents, surpassing an estimate of 51 cents.
Reddit also released a better-than-expected sales outlook for the fourth quarter. The company projects between $655 million and $665 million, topping the $638 million forecast from Wall Street.
These results "speak to the company's continued progress across its ad and platform initiatives," wrote Morgan Stanley analyst Brian Nowak. "We see a long runway for growth across both active advertisers (+75% y/y in 3Q) as well as greater penetration within existing advertisers."
Reddit said that nine of its top 15 advertiser verticals grew more than 50%. Nowak highlighted Reddit's ongoing investments in automation, which are improving return on advertising spending.