Reddit experiences record high and boasts first profit

Reddit's stock reached a new high of $117 on Wednesday, following an impressive surge of over 40%. This development followed the announcement of the first quarterly profit since the initial public offering and revenue that exceeded Wall Street's expectations. On Tuesday evening, Reddit reported quarterly revenue of $348 million, representing a 68% increase compared to the previous year and surpassing the Wall Street forecast of $313 million. The revenue outlook for the fourth quarter also exceeded expectations. Although the adjusted earnings per share remained at $0.16, below the expected $0.20, Reddit managed to achieve a profit of $30 million since the IPO. The nearly 20-year-old company's monthly active users rose by almost 50% to over 97 million, marking significant traffic records for the platform. Sam Altman, a major investor and CEO of OpenAI, can celebrate the enormous increase in the value of his stake to $1.4 billion, based on his February SEC-reported holding of 12.2 million shares. The strong result mainly stemmed from the growth of the advertising business, with a 56% increase in advertising revenues in the third quarter compared to the previous year. The platform also benefited from AI licensing agreements with Google and OpenAI, which supported its profit. CEO Steve Huffman mentioned potential new AI ventures as future growth areas. Analysts from renowned financial institutions, including Deutsche Bank, Bank of America, JPMorgan, and Jefferies, raised their price targets for Reddit to up to $120 in response to the report. Jefferies highlighted that Reddit recorded accelerated ad revenue growth for the fourth consecutive time, signaling a promising monetization opportunity. Stocks of other social media platforms like Snap also benefited from the positive market development. Snap achieved a share price increase of about 15% following a positive earnings report. CEO Evan Spiegel expressed optimism about the significant rise in direct advertisers on the platform.