By Janet H. Cho

When the social-networking site Reddit reports fourth-quarter earnings after Wednesday's closing bell, investors will be looking at three things: its financial results, its user growth, and its revenue prospects, including advertising.

It has been nearly 11 months since Reddit, founded in 2005, hit the stock market via an initial public offering on March 21.

Reddit priced its IPO at $34 a share, and finished its first day of trading at just over $50, for a 48% increase and a market capitalization of $9.6 billion.

Just after noon Eastern on Wednesday, Reddit shares were up 2.2% at around $218 per share. The stock has gained 325% since its IPO and is up 34% so far this year.

Earlier in the day, Reddit announced a deal with Intercontinental Exchange to create data and analytics products for the financial industry in a move that will allow both companies to capitalize on Reddit's enormous amount of user-generated content.

The initiative, Reddit's first major move into the financial sector, will connect the anonymous conversations posted on Reddit to Intercontinental Exchange's data-science and machine-learning infrastructure to provide new datasets and analytics, Reddit explained in a blog post.

The collaboration will make it easier for financial professionals and companies to analyze the more than 16 billion posts and comments on its platform to help inform participants' investment decisions and risk management strategies, Reddit said.

For its December quarter, analysts expect Reddit to report adjusted earnings of 70 cents per share on revenue of $405 million, according to FactSet. Net income is expected to come in at $48 million.

Those numbers compare with 22 cents per share, revenue of $250 million, and net income of $19 million in the December 2023 quarter.

The company, based in San Francisco, is also expected to report 103.12 million daily active users, and average revenue per user of $3.94. In its IPO regulatory filing a year ago, Reddit reported 2023 revenue of $804 million, up 20.6% from 2022, mostly from advertising. Reddit reported a loss of $90.8 million in 2023, down from a loss of $158.6 million in 2022.

It also reported 73 million active users, 267 million weekly unique users, and 1 billion cumulative posts through 2023.

Seaport Research Partners, which initiated coverage of Reddit on Monday with a Neutral rating, said the company has become one of the internet's most popular destinations, with more than 365 million weekly users. "We expect continued user growth momentum, particularly internationally," analyst Aaron Kessler wrote, but noted that it will be harder for the company to achieve impressive gains in 2025 given its expansion in 2024.

Kessler sees Reddit as an attractive platform for advertisers, "with a significant monetization opportunity ahead in both the U.S. and International."

The name "Reddit" comes from the words "read it," reflecting its focus as a place to share and discuss interesting finds online. It is best known for its "subreddit" digital forums and its AMA, or "Ask me anything" sessions with celebrities and politicians.

Its best known subreddit was "r/wallstreetbets," where a group of small-time traders helped inflate the stock price of videogame retailer GameStop, squeezing Wall Street investors who had bet against the company and sparking the volatile "meme stocks" trend.

"One of the founding principles of Reddit was that it be a real place cultivated by real people instead of a fake place manicured by editors and other gatekeepers," co-founder and CEO Steve Huffman wrote in the IPO filing.

"We have confidence in the magic of human-curated organization, creativity, and generosity. Reddit enables these human virtues, which means we can mostly stay out of the way," Huffman said.

Write to Janet H. Cho at janet.cho@dowjones.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

February 12, 2025 14:38 ET (19:38 GMT)

Copyright (c) 2025 Dow Jones & Company, Inc.