Reddit's Competitive Edge Hidden In Age Demographics? CEO Says 'Where Somebody Might Age Out Of Social Media, They Age Into Reddit'

Zinger Key Points
  • Reddit's Q1 earnings show losses due to IPO charges, but gross margin improves significantly to 88.6%.
  • CEO Huffman emphasizes Reddit's unique appeal across age groups, as users transition into the platform with age.

Reddit, Inc. RDDT shares are skyrocketing in the premarket session on Wednesday after ending yesterday’s run with a little over 2% rise.

Yesterday, after the closing bell, the company reported quarterly losses of $(8.19) per share, which missed the analyst consensus estimate of losses of $(6.97) by 17.5%. Driven by IPO charges, stock-based compensation expenses and related taxes were $595.5 million, as compared to $13.2 million in the prior year.

Check This Out: Reddit Shares Soar On First Post-IPO Q1 Results, Strong Q2 Guidance

Following Reddit’s inaugural earnings announcement subsequent to its IPO, CEO Steve Huffman conveyed to CNBC‘s Jim Cramer that the platform inherently leans towards commercialization, emphasizing its appeal to both users and advertisers.

Reddit enjoys a significant advantage in its capacity to allure and maintain users across different age demographics, Huffman highlighted. He elucidated that the platform initially captures the interest of “emerging adults,” referring to individuals in their late teenage years, and remarkably sustains their engagement as they transition into older age groups, CNBC added.

“Where somebody might age out of social media, they age into Reddit,” he said. 

Despite reporting loss per share in the quarter under review, the gross margin was 88.6%, an improvement of 500 basis points from the prior year. 

In addition, Adjusted EBITDA was $10.0 million, as compared to a $(50.2) million loss in the prior year. 

Reddit exited the quarter with cash and equivalents worth $1.67 billion.

 Reddit expects second-quarter revenue in the range of $240 million to $255 million, and adjusted EBITDA in the range of $0 to $15 million.

Price Action: RDDT shares are trading higher by 11.4% to $55.02 premarket at last check Wednesday. 

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

Photo: Ink Drop/Shutterstock

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