Reddit Q3 Revenue Jumps 67.9% to $584.9M, EPS Beats by $0.30
Reddit reported Q3 revenue of $584.9M, a 67.9% increase and 6.9% beat on consensus, with EPS of $0.80 topping estimates by $0.30. Insiders sold 505,470 shares valued at $109M in the past 90 days, Wells Fargo raised its price target from $186 to $207 and GatePass added 5,022 shares worth $1.155M.
1. GatePass Capital and Institutional Investors Increase Stakes
In the third quarter, GatePass Capital LLC initiated a position in Reddit Inc. by acquiring 5,022 shares valued at approximately $1.16 million, according to the latest SEC filing. This move follows similar activity by NewEdge Advisors LLC, which boosted its holdings by 143.3% to 7,982 shares worth $837,000, and UBS Asset Management Americas LLC, which more than doubled its stake to 216,960 shares representing $22.76 million. Additional notable entries include Empowered Funds LLC’s new position valued at $213,000 and Focus Partners Wealth’s 40.8% increase to 10,224 shares worth $1.07 million. Geneos Wealth Management Inc. also expanded its exposure by 344.6%, bringing its total to 369 shares valued at $39,000.
2. Significant Insider Disposals Raise Questions
Over the past ninety days, Reddit insiders have sold a combined 505,470 shares valued at roughly $109 million, representing 34.25% of insider-held stock. Notably, Benjamin Seong Lee, a senior executive, sold 3,320 shares for approximately $863,930 on January 9, reducing his stake by 5.04% to 62,608 shares. Chief Operating Officer Jennifer L. Wong disposed of 39,167 shares on December 19 for about $9.18 million, trimming her holding to 1,184,528 shares, a 3.20% decline. These transactions were disclosed in filings with the Securities and Exchange Commission.
3. Q3 Financial Performance Exceeds Estimates
In its most recent quarterly report, Reddit delivered earnings per share of $0.80, surpassing consensus estimates by $0.30, and generated revenue of $584.9 million, beating expectations by $38.3 million. This revenue figure represents a 67.9% year-over-year increase, driving a net margin of 18.3% and a return on equity of 14.9%. For comparison, the prior-year period saw earnings per share of $0.16. Analysts now project full-year earnings of $1.12 per share.
4. Mixed Analyst Ratings and Upcoming Catalyst
Research houses remain divided on Reddit’s outlook. Three firms maintain a Strong Buy rating, fifteen recommend Buy, twelve issue Hold and one suggests Sell, resulting in a consensus Moderate Buy rating with an average target of $238.57. Wells Fargo recently raised its target from $186 to $207 while upgrading Reddit to Equal Weight. Royal Bank of Canada and UBS have also reaffirmed their Sector Perform and target price assessments. Investors are eyeing the February 5 release of fourth-quarter and fiscal 2025 results as a key near-term catalyst for ads guidance and small-business traction.