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Tech drags stocks lower as rally hits pause

Reddit (RDDT) stock jumped as much as 5% on Wednesday after the company said in its first-ever quarterly earnings report that it expects better-than-expected sales growth for the current quarter and to further progress in terms of profitability.

Reddit said in its statement Tuesday that it expects second-quarter revenue of between $240 million and $255 million, above Wall Street estimates of $228 million. The social media company also said it expects adjusted EBITDA for the current quarter to be between $0 million and $15 million. The Street expected a loss of $13 million.

Reddit’s daily active users reached 82.7 million, up 9% from the previous quarter and faster than analysts expected.

“Reddit had a strong first quarter following its IPO, in our view,” Citi analyst Ronald Josey wrote in a note to clients Wednesday. “More importantly, we believe the improvement in engagement trends is sustainable.”

After soaring following its IPO in late March, Reddit shares fell in the following weeks, falling from a high of around $74 per share to just under $40, as concerns over the company’s high valuation and potential future revenue streams were increasing.

But the report from the company that once hosted fodder for meme stock targets highlighted a trend recently seen in other names favored by retail traders. Reddit stock is up after a quarter that JPMorgan analyst Doug Anmuth described as “strong,” but not rising to a point that’s hard for analysts to reason with.

“We expect trends to remain strong throughout the year given recent tailwinds, and we are increasing our revenue estimates for 2024 and 2025 by 11% and 12%, respectively,” Anmuth wrote.

Anmuth maintained a Neural Rating on the stock while raising his price target from $47 to $57, noting that shares appear “fairly valued” at present.

Learn more about Reddit’s AI opportunities here.

News Source : finance.yahoo.com
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Aimant les mots, Sara Smith a commencé à écrire dès son plus jeune âge. En tant qu'éditeur en chef de son journal scolaire, il met en valeur ses compétences en racontant des récits impactants. Smith a ensuite étudié le journalisme à l'université Columbia, où il est diplômé en tête de sa classe. Après avoir étudié au New York Times, Sara décroche un poste de journaliste de nouvelles. Depuis dix ans, il a couvert des événements majeurs tels que les élections présidentielles et les catastrophes naturelles. Il a été acclamé pour sa capacité à créer des récits captivants qui capturent l'expérience humaine.
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