Reddit Impresses with First Quarterly Profit and Positive Revenue Forecast

Reddit attracted attention with the announcement of its first quarterly profit and positive revenue forecast for the fourth quarter. The success is primarily attributed to lucrative AI content licensing deals and robust spending in the field of digital advertising, leading to a 22% surge in after-hours trading. Since its stock market debut in March, Reddit has already positively surprised and is attracting more advertisers. The targeted use of machine learning for translations into other languages opens up new international markets for the platform. Additionally, a modernization of search functions is announced by 2025, which aims to stand out through the use of large language models and better search results. Through partnerships with Google and OpenAI, which train their AI models with Reddit's content, the company was able to generate additional revenue. Although these collaborations provide financial support, analyses suggest that they might not provide sufficient long-term growth potential. For the fourth quarter, Reddit forecasts revenues between $385 and $400 million, exceeding the analyst average of $357.9 million. In the past third quarter, Reddit achieved earnings per share of 16 cents, compared to a loss of 13 cents in the previous year, despite anticipated losses of 7 cents per share according to analysts. Revenue increased by 68% to $348.4 million, surpassing the expectation of $312.8 million. The daily active unique visitors increased by 47% to 97.2 million, while the global average revenue per user rose by 14% to $3.58. Compared to similar platforms like Pinterest and Meta, Reddit still offers potential for optimization in targeted advertising measures and performance measurement despite these successes.