Social Networking Q3 Earnings: Reddit (NYSE:RDDT) is the Best in the Biz

As the Q3 earnings season wraps, let’s dig into this quarter’s best and worst performers in the social networking industry, including Reddit (NYSE:RDDT) and its peers.

Businesses must meet their customers where they are, which over the past decade has come to mean on social networks. In 2020, users spent over 2.5 hours a day on social networks, a figure that has increased every year since measurement began. As a result, businesses continue to shift their advertising and marketing dollars online.

The 5 social networking stocks we track reported a strong Q3. As a group, revenues beat analysts’ consensus estimates by 2.6% while next quarter’s revenue guidance was 0.9% below.

In light of this news, share prices of the companies have held steady. On average, they are relatively unchanged since the latest earnings results.

Best Q3: Reddit (NYSE:RDDT)

Founded in 2005 by two University of Virginia roommates, Reddit (NYSE:RDDT) facilitates user-generated content across niche communities (called subreddits) that discuss anything from stocks to dating and memes.

Reddit reported revenues of $584.9 million, up 67.9% year on year. This print exceeded analysts’ expectations by 6.3%. Overall, it was a very strong quarter for the company with EBITDA guidance for next quarter exceeding analysts’ expectations and an impressive beat of analysts’ EBITDA estimates.

“Reddit provides something rare on the Internet,” said Steve Huffman, Reddit Co-Founder and CEO.

Reddit scored the biggest analyst estimates beat and fastest revenue growth of the whole group. The company reported 51.6 million daily active users, up 7.1% year on year. Unsurprisingly, the stock is up 25.7% since reporting and currently trades at $244.46.

Read why we think that Reddit is one of the best social networking stocks, our full report is free.

Snap (NYSE:SNAP)

Founded by Stanford University students Evan Spiegel, Reggie Brown, and Bobby Murphy, and originally called Picaboo, Snapchat (NYSE: SNAP) is an image centric social media network.

Snap reported revenues of $1.51 billion, up 9.8% year on year, outperforming analysts’ expectations by 1%. The business had a strong quarter with an impressive beat of analysts’ EBITDA estimates and a narrow beat of analysts’ revenue estimates.

The market seems happy with the results as the stock is up 12.6% since reporting. It currently trades at $8.28.

Is now the time to buy Snap? Access our full analysis of the earnings results here, it’s free for active Edge members.

Weakest Q3: Pinterest (NYSE:PINS)

Created with the idea of virtually replacing paper catalogues, Pinterest (NYSE: PINS) is an online image and social discovery platform.

Pinterest reported revenues of $1.05 billion, up 16.8% year on year, in line with analysts’ expectations. It was a mixed quarter as it posted a solid beat of analysts’ EBITDA estimates but revenue guidance for next quarter slightly missing analysts’ expectations.

Pinterest delivered the weakest performance against analyst estimates in the group. The company reported 600 million monthly active users, up 11.7% year on year. As expected, the stock is down 19.6% since the results and currently trades at $26.56.

Read our full analysis of Pinterest’s results here.

Meta (NASDAQ:META)

Famously founded by Mark Zuckerberg in his Harvard dorm, Meta Platforms (NASDAQ:META) operates a collection of the largest social networks in the world - Facebook, Instagram, WhatsApp, and Messenger, along with its metaverse focused Reality Labs.

Meta reported revenues of $51.24 billion, up 26.2% year on year. This result topped analysts’ expectations by 3.4%. It was a strong quarter as it also logged an impressive beat of analysts’ EBITDA estimates and a decent beat of analysts’ revenue estimates.

The company reported 3.54 billion daily active users, up 7.6% year on year. The stock is down 12.7% since reporting and currently trades at $658.45.

Read our full, actionable report on Meta here, it’s free for active Edge members.

Yelp (NYSE:YELP)

Founded by PayPal alumni Jeremy Stoppelman and Russel Simmons, Yelp (NYSE:YELP) is an online platform that helps people discover local businesses through crowd-sourced reviews.

Yelp reported revenues of $376 million, up 4.4% year on year. This print surpassed analysts’ expectations by 2.1%. Overall, it was a strong quarter as it also recorded a solid beat of analysts’ EBITDA estimates and full-year EBITDA guidance slightly topping analysts’ expectations.

Yelp had the slowest revenue growth among its peers. The stock is down 5.5% since reporting and currently trades at $30.36.

Read our full, actionable report on Yelp here, it’s free for active Edge members.

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