Reddit, Inc. (NYSE:RDDT) shares moved lower, despite a strong fourth-quarter earnings beat and in opposition to a broad market rally on Friday.
After an initial pre-market jump of nearly 8%, Reddit stock has seen some volatility as the broader market processes the details.
Key Highlights from the Earnings Report
Reddit reported impressive growth across its core business metrics:
Earnings Beat: Reported adjusted EPS of $1.24, significantly outperforming the analyst consensus of $0.94.
Revenue Surge: Revenue hit $726 million (up 70% year-over-year), driven by a 75% increase in advertising revenue.
User Growth: Daily Active Uniques (DAUq) rose 19% to 121.4 million, with international growth (up 28%) outpacing the U.S.
Why the Stock is Volatile Today
While Reddit's Q4 numbers were strong, a few bearish details weighed on the stock:
- Slowing Growth: Growth in U.S. logged-in users slowed to 5%, raising concerns about saturation in Reddit’s most profitable market.
- Logged-In, Logged Out: CEO Steve Huffman announced Reddit will stop reporting the split between “logged-in” and “logged-out” users later this year, which some analysts view as a move to mask deceleration in high-value user growth.
- Lower Price Targets: Several analysts lowered price targets on Reddit shares. Cantor Fitzgerald analyst Deepak Mathivanan lowered the price target to $170 from $240 and maintained a Neutral rating, choosing to remain on the sidelines until a more consistent pattern of user expansion emerges.
- Profit Taking: Reddit stock had been on a losing streak (down about 31% over the last nine days) leading up to Thursday's report, so some investors may have used the post-earnings pop to exit.
RDDT Price Action: Reddit stock was down 2.42% at $147.48, while the Dow Jones, tracked by the SPDR Dow Jones Industrial Average ETF (NYSE:DIA), was up more than 1,000 points, according to data from Benzinga Pro.
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