Shares of Reddit (RDDT) rose slightly in after-hours trading after the social media company reported earnings for its third quarter of Fiscal Year 2025. Earnings per share came in at $0.80, beating analysts’ consensus estimate of $0.53 per share. Sales rose 68% year-over-year, reaching $585 million, which topped forecasts of $549.12 million.
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However, while the financial results were strong, investors focused on slowing user growth in Reddit’s core U.S. market, where logged-in daily active users rose 7% to 23.1 million, compared with 12% growth in the previous quarter. Nevertheless, Reddit’s global user base saw total daily active uniques (DAUq) grow by 19% year-over-year to 116 million, which was above analyst estimates of 114 million. Meanwhile, logged-in DAUq worldwide climbed by 14% to 50.2 million, while logged-out DAUq surged 24% to 65.8 million.
Additionally, average revenue per user was $5.04, beating expectations of $4.82. U.S. revenue led the way at $480 million, ahead of forecasts of $445 million, while international sales came in at $105 million, just above estimates of $104 million. Meanwhile, “Other revenue,” which includes data licensing, rose 7% year-over-year to $36 million.
Outlook
Looking ahead, Reddit expects fourth-quarter revenue between $655 million and $665 million, well above Wall Street’s projection of $638 million. Moreover, adjusted earnings are forecast in the range of $275 million to $285 million, beating the estimate of $259 million.
Is RDDT Stock a Good Buy?
Turning to Wall Street, analysts have a Strong Buy consensus rating on RDDT stock based on 16 Buys, eight Holds, and zero Sells assigned in the past three months, as indicated by the graphic below. Furthermore, the average RDDT price target of $237.87 per share implies 22.4% upside potential. However, it’s worth noting that estimates will likely change following today’s earnings report.
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