Reddit Users See An 'Inverse Moment' As Shares Pop 14% On Social Media Platform's Financial Performance

Reddit Inc (NYSE:RDDT) recently released its first quarterly earnings report since its initial public offering (IPO) in March, causing its shares to surge by 14% in extended trading.

The social media platform’s financial results showed a loss per share of $8.19 — lower than the expected $8.71 loss. However, revenue exceeded expectations, coming in at $243 million compared to the estimated $212.8 million.

This marked a significant 48% increase from the previous year, with ad revenue alone reaching $222.7 million, up 39% year-over-year and outpacing its competitors.

Despite these positive numbers, Reddit reported a net loss of $575.1 million, attributed largely to stock-based compensation expenses and related taxes totaling $595.5 million, primarily driven by IPO charges.

Nonetheless, the company’s performance was seen as a strong indicator of its growth potential, with analysts noting that Reddit could become profitable soon, given its free cash flow this quarter and the fact that most expenses were IPO-related.

Related: Reddit’s Enhanced Advertising Tools Drive ‘Sizable Upside’: JPMorgan

Redditors Discuss AI, Term Stock Pop An ‘Inverse Reddit Moment’

One of the key factors driving Reddit’s growth is its licensing for AI training.

Redditors discussed how this could be a game-changer, with the company’s CEO, Steve Huffman, mentioning that licensing currently accounts for only $20 million of revenue. They remain selective about who they license to.

The potential for AI to post in threads and earn rewards based on upvotes was also highlighted, indicating Reddit’s innovative approach to monetizing its platform.

Additionally, Redditors pointed out the value of Reddit’s user data for AI training, noting that the platform provides authentic user experiences across various topics. This data could be precious for AI companies looking to improve their models using real-world interactions.

Despite the positive reactions, some Redditors expressed skepticism about Reddit’s future profitability.

They questioned the stock’s surge given the company’s current financials, calling it “an inverse reddit moment,” and compared it to other companies whose stocks fell despite beating earnings expectations.

However, others argued that Reddit’s future outlook and revenue forecasts were reasons for the stock’s rise, indicating confidence in the company’s growth potential.

Reddit’s first earnings report sparked a lively discussion among Redditors, highlighting both optimism and skepticism about the company’s future.

While some see Reddit’s growth potential and innovative strategies as reasons for optimism, others remain cautious, emphasizing the need for the company to demonstrate sustained profitability in the future.

Read Next: Can Reddit’s Solid Momentum Continue? Analysts Say Social Media Company With ‘Robust Business Model’ Has ‘Continued Strong User Growth’

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