By Anita Hamilton

Social media site Reddit has seen its stock notch huge gains -- and losses -- over the past six months. While its stock was rising Thursday ahead of the release of its first quarter earnings report after the market close, it's still down nearly 50% since its recent high in early February.

Analysts surveyed by FactSet are expecting earnings of two cents a share and revenue of $369.5 million, for a 52% increase over the same period in 2024. When Reddit reported earnings last quarter, it forecast first quarter revenue of $360 million to $370 million, with earnings before interest, taxes, depreciation, and amortization (Ebitda) of $80 million to $90 million.

Investors will be watching to see if Reddit can sustain recent user growth and advertising gains notched since it went public last March. Researchers at B. Riley wrote last week that they expect top-line growth to be driven by the number of daily visitors to the site and subsequent advertising impressions. Almost all of Reddit's revenue comes from advertising.

The site benefits from user interactions that give Reddit "very specific signals about user interests, presenting a very compelling advertising opportunity," Oppenheimer analysts noted when they initiated coverage in April with an outperform rating. They also noted that "Reddit" is the sixth-most-searched term on Google, giving it a symbiotic relationship with the search engine.

Reddit stock surged in October when it surprised investors with its first profit on an earnings per share basis, and they reached a 52-week closing high of $225 on Feb. 7. The stock has since retreated from that level amid worries about user growth.

Write to Anita Hamilton at anita.hamilton@barrons.com

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May 01, 2025 12:53 ET (16:53 GMT)

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