Reddit stock is soaring after the social media player posted a rare profit.
Reddit on Tuesday reported third-quarter net income of nearly $30 million, and revenue for the period of $348.4 million, beating analyst expectations. Those numbers were up from a loss of $7.4 million on revenue of $207.5 million a year ago. Showing impressive customer growth, the business now has more than 97 million daily users, an increase of 47% year-on-year.
Artificial intelligence is a major factor in Reddit’s recent rapid growth. In a letter to shareholders, Reddit co-founder and CEO Steve Huffman said that AI can translate posts between English, French, Spanish, Portuguese, Italian, and German. He said that the number of users has quadrupled due to the new service installed. He added that Reddit plans to roll out this feature to more than 30 countries in 2025.
“So far in 2024, ‘Reddit’ is the 6th most Googled word in the US, highlighting how people turn to Reddit when they’re looking for answers, advice, and community.” ,” Huffman wrote. “We saw this happen in real time during the recent hurricanes when the White House came to Reddit to share critical information and timely updates were delivered to people in affected areas. I made it.”
Reddit was launched by Huffman, Alexis Ohanian, and Aaron Swartz in 2005, just 16 months after Mark Zuckerberg launched Facebook. But Reddit didn’t go. Open until early this year Despite steadily growing viewership, it never turned a profit, racking up hundreds of millions of dollars in losses.
Reddit’s stock debuted on the New York Stock Exchange in March at $34 a share under the ticker symbol “RDDT,” but has since more than tripled in value and was trading at $113.50 as of Wednesday afternoon. It rose 39% on the day.
For now, the company’s main source of revenue remains advertising, but it also now receives funding through financial deals with companies like Google and OpenAI that train generative AI tools on Reddit content.
Reddit was also profitable in both 2021 and 2023, the company said.
“Looking ahead to the future, including the search experience on Reddit, is an important part of our strategy,” Huffman said on a call with Wall Street analysts on Tuesday. “We want to give all of our users the best experience possible, including those who come to Reddit through external searches and who choose what to buy, watch, or Includes users who search directly on Reddit looking for recommendations on what products and services are available.
contributed to this report.
