They Laughed at Reddit’s IPO… Now They’re Tripping Over Each Other to Buy Shares

I can’t be the only one who, when I’m about to make any kind of decision (medical, financial, romantic, or “should I buy this weird chair on Amazon”) opens up Reddit and types “(thing I’m about to do) + Reddit.” Forget Google Scholar. I want the real data: unhinged opinions, emotionally charged arguments, and at least one guy claiming to be a doctor (but who types like he failed kindergarten handwriting).

Well, I’ve finally got some proof I’m not alone… because Reddit just posted some serious gains… not just in its user base, but in cold, ad-funded, algorithm-assisted cash. And yes, it made a lot of that money off people like me panic-searching through threads at 2 a.m.

Over the last year there’s been a lot of voiced skepticism over whether Reddit could ever consistently monetize its messy, meme-filled corner of the internet, and I’d argue a lot of that criticism ironically happens in reddit threads. But that said, Reddit’s been proving doubters wrong… And they didn’t stop this quarter. 

Reddit’s Q1 earnings were impressive. The company reported $392.4 million in revenue, up 61% year-over-year… making it Reddit’s third straight quarter of 60%+ revenue growth. And I know sometimes revenue numbers can be misleading but get this… Reddit posted net income of $26.2 million (or $0.13 a share), which absolutely obliterated analyst expectations of just $0.02. This time last year, they were eating a $575 million loss, thanks to IPO costs. So yeah, bit of a turnaround.

Daily active users jumped to 108.1 million, up 31% YoY. International growth is leading the way… 59 million users outside the U.S., thanks in part to Reddit’s machine translation now supporting 13 languages. Oh and a big part of Reddit’s recent growth came from… Google. Ironically the same Google that nearly tanked their traffic in Q4 with a search algorithm change is now firehosing users back into Reddit (pretty lucky break if you ask me).

And on top of the standard logged-in nerds. Reddit’s logged-out users (aka the lurkers) grew 38% YoY to over 59 million. Reddit’s now trying to convert these folks into account holders, since advertisers like targeting people who actually have usernames (makes sense). While Google, OpenAI, and every startup with a mascot ending in “.ai” are chasing the dream of sterile, summarized answers from chatbots, Reddit’s going all in on what it does best… weird questions with a bunch of people who think their experts giving relationship advice.

CEO Steve Huffman summed it up perfectly: “Reddit will always meet the need of people looking for subjective, authentic, messy, multiple viewpoints.” Reddit is one of those businesses that can’t be replaced by AI, it’s one of the last real human elements we have left (now that podcasts are becoming mainstream).

And in case you were wondering, Wall Street’s bringing the bullish energy. JPMorgan raised its price target to $145. Citi went even further… $158. For reference, that’s more than double its IPO price from last year. Reddit’s got gross margins over 90%, is sitting on more cash than debt, and expects $410M–$430M in revenue next quarter. And if it hits those numbers, it might just meme itself into becoming the Meta killer no one saw coming.

Reddit’s finally figured out how to monetize its hive mind… and it didn’t even need NFTs, a metaverse, or a Super Bowl ad. Just good ole fashioned ad revenue from desperate Googlers like me. So if you’ve ever typed “Why does the market keep tanking Reddit”... you can go to bed comforted that you just made them a little richer.

Wanna feel worse? They made $358.6 million in ad revenue last quarter… that’s roughly $3.30 per user, per quarter… just from ads. Now if only they could fix the mobile app.

PS: The headlines are full of panic… inflation’s too high, the Fed’s asleep at the wheel, and Trump never fails to kill any market momentum with more tariffs. On the surface, it looks like the market’s barely breathing.

But underneath all that noise?

We’re seeing some of the fastest stock moves in years… especially in the small-cap space, where low float and high tension can trigger a 100% pop before lunch. Some are up 200% in under 24 hours… and nobody on CNBC is talking about them.

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Stock.News has positions in Google, Amazon, and Meta.