Reddit Rallies As Ad Growth Drowns Out User Miss

Shares of Reddit Inc (NYSE:RDDT) rallied in early trading on Friday, after the company Thursday reported upbeat first-quarter results. Here are the key analyst insights: JPMorgan analyst Doug Anmuth reiterated a Neutral rating and price target of $200. DA Davidson analyst Wyatt Swanson maintained a Buy rating and price target of $200. Needham analyst Laura Martin reaffirmed a Buy rating and price target of $300. Check out other analyst stock ratings. JPMorgan: Reddit reported DAUq (daily active unique users) net adds exceeding 5 million. That’s in-line with expectations. Its goal is to reach 100 million US DAUq over time, Anmuth said in a note. The company's ad revenues grew 74% year-on-year, marking the seventh consecutive quarter of more than 60% ad revenue growth, he added. Active advertisers grew 75% year-on-year, with "broad-based & full-funnel strength," the analyst stated. "We recognize RDDT's unique profile featuring high growth, strong profit, & low capital intensity, but we look for greater platform scale & continued strong monetization to become more positive," he further wrote. DA Davidson: Reddit reported solid quarterly results, "reflecting continued strength and broad-based momentum in the business," Swanson said. For Reddit, a U.S. daily active user (DAUq) figure of 53.5 million versus expectations of 53.8 million is a slight miss, However, Reddit has been recording strong WAUq (weekly active unique users) for both the U.S. and international, which "presents an obvious opportunity" to drive additional engagement and convert them to daily users. Needham: Reddit's revenues grew 69% year-on-year to $663.4 million and adjusted EBITDA by 131% to $266 million, Martin said. The company reported non-GAAP earnings of $1.20 per share, which came in 9% above Needham's estimate, she added. Management announced revenues of $715-$725 million and adjusted EBITDA of $285-$295 million, implying 43%-45% and 71%-77% year-on-year growth, respectively. Around 40% of Reddit's conversations are commercial in nature. That gives the company "a strategic position in the consideration stage of the purchase funnel," Martin said. These high-intent conversations "are an important driver of upside pricing power," she added. RDDT Price Action Shares of Reddit had risen by 10.91% to $163.29 at the time of publication on Friday. Read Also: Roku Rewinds Doubters With Ad-Fueled Earnings Beat Image: Shutterstock