The question went screaming across the Internet not so long ago: "What the f#!* did I just find in my bathroom?"
The query came along with a photo of some really funky insect critter, and the responses rapidly followed.
Related: Analysts revamp Reddit stock price target ahead of earnings
"We call it a Spricket... A spider cricket," one person said.
"Camel Cricket. Scary because they jump at you but harmless," came another response.
"I hate these things with a passion," another contributor said. "Harmless? Tell my nightmares!"
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All this buggy behavior was happening on the social-media site Reddit (RDDT) , which beat Wall Street's third-quarter earnings expectations on Oct. 29.
Shares of the San Francisco company were skyrocketing 42% at last check and the stock has more than doubled (up 137.5%) year-to-date.
Founded in 2005, Reddit enables registered users to submit content such as links, text posts, images and videos, which other members vote up or down.
Posts are organized by subject into user-created boards called "communities” or “subreddits.”
"I'm excited to share that Q3 was a landmark quarter for Reddit," Co-Founder and Chief Executive Steven Huffman told analysts during the company's earnings call. "Our Q3 revenue grew 68% year-over-year, and I'm proud to announce that we also achieved GAAP profitability."
Reddit CEO: 'influence continues to grow'
Huffman said Reddit averaged over 97 million daily active uniques, up 47% from a year earlier, and the site for the first time exceeded 100 million DAUqs during the quarter, "which has been a longstanding milestone for us."
"Reddit's influence continues to grow across the broader Internet," Huffman said. "In 2024, so far, the word 'Reddit' was the sixth most Googled word in the United States, underscoring that when people are looking for answers, advice or community, they seek out Reddit specifically."
He said Reddit saw this play out in real time. When the White House came to the site to share critical information during the recent hurricanes, "they used our Reddit Pro tools to identify the right communities to reach people affected by these events."
"In fact, thousands of businesses are now using Reddit Pro, including" Major League Baseball and the National Football League, he added.
For the quarter, Reddit earned 16 cents a share, swinging from a loss of 13 cents a year earlier and beating Wall Street’s consensus call for a loss of 7 cents per share.
Revenue totaled $348.4 million, up from $207.5 million a year earlier and coming in ahead of analysts’ forecast of $312.8 million.
International daily average users grew 44% year-over-year, led by 53% growth in Reddit’s focus markets, most notably in France, India and the Philippines.
“This year we started using AI to translate Reddit's corpus into other languages, making it more accessible for non-English speakers to enjoy in their native languages,” Harmon said.
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Machine translation, which uses AI to translate text or speech from one language to another, drove four times more users than last quarter, Harmon said. And "based on the success we've seen so far, we plan to expand machine translation to over 30 countries through 2025."
Reddit estimated fourth-quarter revenue at between $385 million and $400 million, beating the average analyst estimate of $357.9 million. Adjusted fourth-quarter earnings will range from $110 million to $125 million, higher than the $85.2 million average estimate.
"What's there to say?" TheStreet Pro's Stephen Guilfoyle wrote on Oct. 30. "The quarter was excellent. The guidance is strong. Cash flows are better than healthy. The balance sheet is beyond outstanding."
The veteran analyst, whose career stretches back to the 1980s on the floor of the New York Stock Exchange, said "Reddit is probably a good stock to invest in, but a bad stock to trade in from the long side for now."
Analyst cites 'Dr. Jekyll and Mr. Hyde story'
Bernstein analysts saw a classic tale playing out with Reddit's results, specifically Dr Jekyll and Mr. Hyde.
The investment firm raised its price target on Reddit to $85 from $65 and kept an underperform rating on the shares following the earnings report, according to The Fly.
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The firm said the clouds around Reddit have "quickly defogged into a real Dr. Jekyll and Mr. Hyde story."
Reddit began trading on the New York Stock Exchange on March 21 and Bernstein said that before the IPO, Reddit felt stuck, unable to grow users or monetize the platform or viewed as real business - this is Mr. Hyde.
Reddit struck a deal with Google (GOOGL) enabling the search engine giant to use posts from the site to train its artificial-intelligence models and improve services.
Post-IPO, the investment firm said, Reddit suddenly looks like an AI winner, growing ad revenue at an unprecedented clip and hitting years-long profitability targets in months.
This is Dr. Jekyll, Bernstein said, and right now, Dr, Jekyll is in charge.
Related: Analyst adjusts Meta stock price target with earnings on tap
Loop Capital raised its price target on Reddit to $120 from $90 and affirmed a buy rating on the shares.
In this quarter Reddit reported an even larger upside to its beat-and-raise than it did in its first full quarter as a public company and, surprisingly, was GAAP-earnings positive in the period, the investment firm said. The upside was driven by a 56% gain in advertising.
Reddit is still in the early innings of driving user growth and expanding monetization, Loop Capital said.
Citi analyst Ronald Josey raised the firm's price target on Reddit to $120 from $70 and maintained a buy rating on the shares.
The company reported "impressive" third-quarter results with revenue coming in 11% above consensus and Ebitda coming in 57% above the high end of guidance, Josey said.
Underscoring the results is Reddit's continued user growth and engagement gains. Daily active users were up 47% year-over-year, led in part by greater conversations on the platform as well as from its machine translation initiatives globally, the analyst said.
Josey said the trends could continue as newer ad units launch and incremental surfaces — like search, video and shopping — are monetized as Reddit's operating leverage continues.
Related: Veteran fund manager sees world of pain coming for stocks
