Reddit sets the tone for benchwarmers waiting to go public, in its first post-IPO earnings
Good karma… Reddit shares jumped after the social co reported surging user #s and revenue, the first time Reddit’s reported quarterly results since going public in March. Daily users grew 37% annually to a record 83M, as Redditors browsed pages like r/birdswitharms. In between yoked bird pics, users saw ads: revenue grew 48% to $243M, with ad $$ accounting for the bulk of it.
You r/unprofitable: Reddit’s never turned a profit, and its quarterly loss widened to $575M from $61M last year (it cited IPO-related costs).
High-intent users… Reddit’s pitch deck to advertisers is a bit different than that of its social-media peers (BTW: Meta and Snap also enjoyed growing ad sales last quarter). Instead of chatting with friends and browsing selfies, Reddit users visit hyper-specific pages like r/Mattress — which could be an appealing ad buy for a home-goods store. Reddit visits are so intentional that it’s become a quasi search platform as users add “Reddit” to the end of their Google queries (picture: “best mattress reddit,” “weird bump on finger reddit”). Reddit doubled down on that symbiosis by cutting an AI-licensing deal with Google that could be worth $60M/year.
One downside: More than half of Reddit users aren’t logged in (they’re “lurkers”), meaning Reddit and its advertisers could lose out on some engagement and data.
Success is contagious… There’s a lot of pressure on little Snoo, Reddit’s alien mascot. Reddit was the first social platform to IPO since Pinterest in 2019, and the 19-year-old company went public during a debut drought. Its share price has yet to dip below its $34 IPO price, and that success could inspire private companies on the bench to hit the public field. Dealmaking may already be picking up: 20 US companies went public in April, up from 12 in March.