Reddit (RDDT) is set to report third quarter earnings after the bell on Thursday as investors watch for any signs of a slowdown in its daily active users and updates about potential expansions of AI licensing deals.
Wall Street analysts tracked by Bloomberg project the social media platform will report adjusted earnings per share of $1.07 for the period, up more than 80% from its EPS of $0.59 in the same quarter last year, when Reddit reported its first profit since its IPO.
The company is expected to see revenue of $549 million for the period, a 58% increase from $348 million in the year-ago period, according to Bloomberg consensus data.
For the September quarter, analysts estimate Reddit will report 114 million daily active users, according to Bloomberg data. While that would mark a 17% increase from the prior year, it would also represent a continued deceleration in user growth — a pattern that has concerned some on Wall Street. Reddit has recorded five straight quarters of slowing growth in daily active users since its user figures jumped more than 50% in the second quarter of 2024.
Advertising revenue is projected to have jumped 63% to $513 million in the third quarter.
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Several Wall Street analysts at firms including Deutsche Bank, B Riley Securities, and Raymond James reiterated their Buy ratings on the stock in notes to investors this month.
Deutsche Bank analyst Benjamin Black said Reddit’s efforts to attract users — such as promoting the platform through ads on Facebook — could help boost ad revenue this quarter.
“While Google-related referral traffic concerns remain, internal initiatives appear to be a focus, potentially giving Reddit more control of user growth,” he wrote in a note Tuesday, raising his price target on the stock to $245 from $205.
Analysts are also watching for any commentary about Reddit’s licensing deals with Google (GOOGL, GOOG) and OpenAI (OPAI.PVT). In mid-September, Reddit stock soared after Bloomberg reported the company was looking to strike its next data licensing agreement with Alphabet-owned Google and was set to discuss a new pricing model for that deal, as well as its partnership with OpenAI. The new pricing terms would allow Reddit to be paid more, as its content is used more often in the companies’ AI answers, Bloomberg wrote, citing unnamed executives.
But the stock plummeted in early October as third-party data suggested Reddit citations in OpenAI’s ChatGPT had fallen in mid-September, raising concerns about Reddit’s negotiating power in its licensing deal with the AI developer.
