Proactive Investors - Reddit (NYSE:RDDT) will hand down its first financial report as a public company on Tuesday, May 7, with analysts expecting the social media’s topline growth to be fuelled by its expanding user base.
Wedbush analysts see Reddit (NYSE:RDDT) posting revenue of $212 million, in line with the Street consensus. Analysts, on average, also forecast a loss per share of $2.34.
Ad revenues are expected to be up 21% year-over-year at $199 million, with the potential for upside given Snap (NYSE:SNAP) and Pinterest’s quarterly reports which showed sequential improvements, the analysts wrote in a note to clients.
They see daily average users to be up 28%. “Sensor Tower data suggest mobile daily active users increased 20% year-over-year in Q1, a 7-point acceleration from 13% in 4Q as Reddit (NYSE:RDDT)’s relevancy and speed initiatives are driving increased activity,” they wrote.
“We expect a positive tone on user trends and ad platform progress. The risk is high expectations given peer results,” they wrote.
Second quarter revenue and user outlook are expected to be the most important drive of post-call stock performance, the analysts believe.
“Snap and Pinterest (NYSE:PINS) 2Q outlooks were 2 to 3 points above the Street on a healthy demand environment but also indicated quarter-over-quarter deceleration,” the Wedbush analysts wrote.
“Also, quarter-to-date Sensor Tower data suggests Reddit global mobile daily active users trending well, up 3.9% in the quarter-to-date, (US up 3.2% and international up 4.5%).”
They have raised their forward estimates based on ad revenue trends in the sector and positive third-party user data for April.
They see 2Q revenue of $229, instead of its earlier forecast of $222 million. The consensus is for revenue of $227 million.
Ad revenue growth is seen at 15% on tougher comparisons.
For 2024, they see revenue of $1 billion and $1.23 billion for 2025.
Based on their revised estimates for 2025 revenues and a higher multiple, the Wedbush analysts upped their price target on the stock to $50.
Shares of Reddit traded 3.4% higher at about $48 on Monday afternoon.