Core Insights - Analyst Aaron Kessler upgraded Reddit from Neutral to Buy with a price target of $165, citing strong international momentum, rising logged-in users, and a high-intent commercial audience [1][2]. User Growth - Reddit reported a quarterly revenue of $392.36 million, up from $242.96 million year-over-year, exceeding the analyst consensus estimate of $370.01 million [8]. - Total Daily Active Users (DAUs) grew in the high teens through April, with a 50% increase in the number of advertisers for the quarter [8]. - International users represent 54% of total users and approximately 20% of revenues, with significant growth driven by machine translation available in 13 languages [9]. Advertising Revenue - Advertising revenues are expected to drive second-quarter revenue growth guidance of 46-53%, with about 40% of Reddit conversations being commercial [4]. - Reddit's ad load is approximately 1 in 8 posts, compared to 1 in 5 for other leading social platforms, indicating potential for increased ad load [5]. Search and AI Integration - Reddit rolled out its first search machine learning model, enhancing the relevance of search results and integrating Reddit Answers, an AI-powered tool for dynamic search experiences [6]. Future Projections - Kessler projected second-quarter revenue of $420.3 million and earnings per share (EPS) of $0.18, with Reddit estimating revenue between $410 million and $430 million [10][11].
Reddit Rallies On Ad Surge, Global Growth: Analyst Upgrades To Buy