Reddit Q4 Earnings Preview: What to Expect After 400% Stock Rally
Reddit Q4 Earnings Preview: What to Expect After 400% Stock Rally
The company reports Q4 earnings after a 40% YTD surge. Can it beat expectations following a stellar year?
- Reddit is scheduled to report earnings after the market close on Wednesday.
- Analysts expect to see earnings per share of $0.25 on $404.5 million in revenue for Q4.
- The options market expects an implied move of +/- 34 points, or 15% of the stock price.
Reddit (RDDT) is scheduled to report fiscal fourth quarter earnings on Wednesday, after the market close. Company leadership will host a conference call to discuss the results at 4:00 p.m. CST.
The social media company—known as the front page of the internet—listed its shares on the New York Stock Exchange last year. Since then, the stock has risen over 400%, making it one of the most successful initial public offerings (IPOs) of the year.
Reddit has continued its 2024 performance this year, with prices rising nearly 40% from the start of the year. The 20-year old company has outperformed other high-flying tech names and its position as a market darling was cemented last quarter when the company posted strong profits and healthy growth in number of users.
What do investors expect?
This will be Reddit’s fourth earnings report since last year when the company was listed on U.S. markets. Since then, it’s managed to beat expectations every time. Another earnings beat could help propel the stock price to new heights.
Analysts expect Reddit’s Q4 earnings per share (EPS) to cross the wires at $0.25 and revenue to cross above $400 million, according to TradingView. That would compare to an EPS of $0.16 and revenue of $348 million last quarter.
Analysts remain mostly bullish on the stock, with 14 strong buy and buy ratings, eight hold ratings and only one sell rating. However, the average one-year price target was 187, representing an 18% decline from Monday’s 226 trading price.
Trading Reddit
Reddit traded with an implied volatility (IVR) rank of 36.4 as of Monday, Feb. 10. The implied move of +/- 15% puts it well above the average move seen in S&P 500 companies of 5% to 10%. That said, traders who expect RDDT to remain within its trading range post-earnings could employ an iron condor with the view that volatility will contract.
The price increase seen over the past several months leaves Reddit in uncharted territory. New all-time highs often lead to further highs, but a pullback to the 180 to 200 range, established between December and January, could occur if RDDT disappoints.
Thomas Westwater, a tastylive financial writer and analyst, has eight years of markets and trading experience. #@fxwestwater
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