After a two-year tech IPO market freeze, Reddit emerged as a standout performer, with its listing garnering significant market attention. This article delves into Reddit's post-IPO performance from a financial analysis perspective, drawing insights from multiple sources.
Background and First-day Performance:
Dubbed as the "American version of Tieba (a Chinese online forum similar to Reddit)," Reddit debuted on the New York Stock Exchange in March 2024 under the ticker symbol RDDT. Priced at $34 per share, Reddit offered 22 million shares, raising a total of $748 million. On its first day of trading, Reddit's stock surged by 48%, surpassing a market valuation of $5 billion, showcasing robust market approval.
SOURCE：Investing
Data as of May 13,2024
Financial Condition and Revenue Growth:
Despite Reddit's historical struggles to achieve profitability, its annual sales in 2023 reached $804 million, with a net loss of $90.8 million, marking a narrower loss compared to 2022. In the first quarter of 2024, Reddit reported revenues of $243 million, a staggering 48% year-over-year growth, far exceeding market expectations. Although the company reported a net loss of $575.1 million or $8.19 per share, the loss was better than the market's expected $8.75 per share. Advertising revenue, as its core business, surged by 39% year-over-year, with daily active users reaching 82.7 million, a 37% increase.
Having just completed its IPO in March, Reddit, despite not yet achieving profitability, posted an adjusted EBITDA of $10 million for the first quarter, a significant improvement compared to the $50.2 million loss in the same period last year. The company also generated positive cash flow of $29.2 million in the first quarter.
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First Quarter 2024 Financial Highlights
Note: All figures are in millions and are unaudited
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2024
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2023
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Changes
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US Revenue
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$199.8
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$130.6
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53%
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International Revenue
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$43.2
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$33.1
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30%
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GAAP Gross Margin
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88.6%
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83.6%
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/
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Non-GAAP Gross Margin*
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88.7%
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83.7%
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/
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Net Income (Loss)
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-$575.1
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-￥60.9
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NM
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Adjusted Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA)
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$10.0
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-$50.2
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NM
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Net Cash Provided by Operating Activities
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$32.1
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$4.1
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NM
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Free Cash Flow
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$29.2
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$3.7
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NM
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Cash, Cash Equivalents, and Marketable Securities
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$1670.4
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/
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/
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SOURCE：XINLANG
Data as of March 31,2024
User Economy and AI Development Potential:
Reddit boasts a vast user base and a rich content ecosystem, with its potential in user economy and artificial intelligence development being highly regarded by the market. Reddit plans to increase its revenue through international expansion and content translation, while investing in AI technology to enhance content recommendations. Additionally, Reddit's data licensing agreements with companies like Google, valued at approximately $60 million annually, underscore its commercial potential in the AI field.
Future Outlook and Challenges:
Looking ahead, Reddit anticipates second-quarter revenue to fall between $240 million and $255 million, with adjusted EBITDA expected to range from breakeven to $15 million. However, Reddit faces challenges such as sustaining user growth, improving monetization capabilities, and maintaining differentiation in the competitive social media landscape.
In summary, Reddit's post-IPO performance is commendable. With its massive user base and unique community culture, the company demonstrates strong momentum in advertising revenue and user growth. Moreover, Reddit's foray into the field of artificial intelligence and the potential for user economy development provide new growth engines. Despite numerous challenges, the market holds a positive outlook on Reddit's long-term value and profitability. As the company continues to advance its business strategy and optimize operational efficiency, Reddit is poised to occupy a more prominent position in the realms of social media and AI.
How to place a trade on uSMART mobile application：
After logging into the uSMART SG APP, click on "Search" from the top right corner of the page. Enter the stock code "RDDT" to access the details page for trading information and historical trends. Click on "Trade" at the bottom right corner and select the "Buy/Sell" function. Finally, fill in the trading conditions and submit the order. Please see the image guide below for step-by-step instructions:
This diagram is provided for illustrative purposes exclusively
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We have based this article on our internal research and information available to the public from sources we believe to be reliable. While we have taken all reasonable care in preparing this article, we do not represent the information contained in this article is accurate or complete and we accept no responsibility for errors of fact or for any opinion expressed in this article. Opinions, projections and estimates reflect our assessments as of the article date and are subject to change. We have no obligation to notify you or anyone of any such change. You must make your own independent judgment with respect to any matter contained in this article. Neither we or our respective directors, officers or employees will be responsible for any losses or damages which any person may suffer or incur as a result of relying upon anything stated or omitted from this article.
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