Jim Cramer, the well-known stock market commentator, set social media buzzing this week after he tweeted about Reddit’s stellar earnings report, putting it on par with Google’s results.
Cramer acknowledged that it’s difficult to determine which of the two tech behemoths made more money, referring to Reddit’s revenues as “amazing.” Considering Google’s dominance in the tech industry, this is quite the endorsement.
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Cramer's tweet may seem surprising, especially as Google has long been one of the world's tech giants. However, it shows how Reddit has evolved into a successful company that can contend for investors’ and users’ attention.
Both businesses produced impressive third-quarter earnings that surpassed forecasts, which prompted the comparison. Despite an anticipated loss of 8 cents per share, Reddit’s performance has been good, with earnings of 16 cents per share.
Revenue also surpassed estimates, coming in at $348.4 million, and the company’s gross margin improved to 90.1%. Perhaps the most noteworthy figure was the 47% rise in daily active users to 97.2 million. For the first time since its March IPO, Reddit turned a profit.
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Wall Street was also captivated by Reddit’s optimistic outlook. The company expects fourth-quarter revenue between $385 million and $400 million, outpacing the analyst estimate of $356.7 million.
As a result of Reddit’s impressive performance, analysts promptly modified their projections. Roth MKM increased from $89 to $116, Piper Sandler from $70 to $115, and
Needham increased its price objective from $85 to $120.
However, Google also had a fantastic quarter. The tech behemoth beat analyst projections of $1.83 per share with earnings of $2.12 per share. Cloud revenue increased 35% year over year to $11.4 billion, contributing to the $88.27 billion in revenue. Advertising revenue also rose, beating estimates at $65.85 billion.
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The appeal of new AI features like AI Overviews, which currently serve 1 billion users each month, and the robust growth of Google’s cloud business was highlighted by CEO Sundar Pichai. With CFO Anat Ashkenazi declaring a $13 billion budget for the upcoming quarter, Google intends to continue making significant investments in AI and data technology.
Despite the positive numbers from both companies, what really stands out is the sentiment surrounding Reddit. Jim Cramer’s excited tweet suggests a change in public opinion. Reddit is becoming more popular as a strong platform with genuine commercial value in addition to being a social community. The company’s notable revenue growth, increased user base, and enhanced profitability are creating a stir.
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