Reddit Earnings Forecast Spark Community Debate About Platform's Value

Zinger Key Points
  • Reddit's upcoming earnings sparks debate on its valuation and expectations.
  • Redditors discuss Reddit's potential for growth and monetization, contrasting bullish and cautious views.

Reddit Inc RDDT reveals its first-quarter earnings today (Tuesday). Wall Street expects -$8.71 in EPS and $212.83 million in revenues as the company reports after market hours.

The stock is up 1.74% over the past month and up 2.72% over the past five days. After the stock’s initial plunge post-IPO on March 21, it hadn’t moved much. Reddit stock investors now pegged their hopes on the first-quarter earnings to move the needle.

As Reddit’s earnings announcement loomed, discussions on r/wallstreetbets were heating up with users like Capable-Jicama2155 advocating for a bullish stance on the platform’s future.

Despite Reddit’s status as the third most-visited website in the U.S., its market cap sits at a modest $7 billion, prompting comparisons to companies like CAVA Group Inc CAVA, which boasts a market cap of $8 billion. 3Redditors found Reddit’s potential for growth intriguing, especially with its unique user data and high ceiling for user-generated content, rivaled only by YouTube.

Also Read: Trump Media Vs. Reddit — Analyzing The Showdown Of Social Media Giants

However, not all Redditors found this convincing.

Some, like margalolwut, noted the subreddit’s ironic anti-Reddit sentiment.

Others were more optimistic, citing Reddit’s organic community and potential for monetization through multivariate testing. Adding to the discussion, Redditor mfairview highlighted Reddit’s revenue potential, which was expected to surpass a billion this year.

On the flip side, Redditor ms_channandler_bong pointed out Reddit’s expected EPS of -$8.71 and the CEO’s ownership of 61.5% of class A shares, signaling potential pitfalls. Redditor newebay provided context, explaining that the CEO’s ownership is less significant due to the distribution of class A shares.

Redditor fenriswulfwsb offered a word of caution, warning about low liquidity in Reddit’s option chain, and advising traders to be mindful of premiums and potential difficulties in exiting positions.

As Redditors weigh the pros and cons, the community eagerly awaits Reddit’s earnings report to see if their speculations align with reality.

Reddit’s first quarter 2024 earnings call can be watched here (live at market close):

Read Next: Reddit Analysts Expect ‘Strong Beat And Raise, Healthy Engagement Trends’ For Q1 Earnings

Photo: Ink Drop/Shutterstock

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