### Reddit Stock Surges Over 40% Following Milestone Profit Announcement

Reddit's stock saw a dramatic surge on Wednesday, climbing more than 40% to a record high of $117. This spike followed the company's announcement of achieving its first-ever profit since going public, coupled with a third-quarter revenue that surpassed Wall Street's expectations.

Closing at $116, Reddit shares marked a 42% increase. The surge came after Reddit reported a quarterly revenue of $348 million for Tuesday evening—an impressive 68% jump from the previous year and well above Wall Street's forecast of $313 million. The company also provided optimistic revenue projections for the fourth quarter, which exceeded analysts' estimates as well.

Despite an adjusted earnings per share of $0.16, which fell short of the anticipated $0.20, Reddit reported a profit of $30 million for the first time since its IPO. This notable achievement comes after reporting a net loss of $10 million in the prior quarter and $7.4 million in the same period last year. Redit also noted that it had twice previously attained profitability before going public, during the fourth quarters of 2021 and 2023.

Reddit's user traffic reached new heights with daily active users soaring nearly 50% to over 97 million. The company had first made its debut on the stock market in March, in one of the most talked-about IPOs of 2024. This latest stock surge has significantly increased the value of major investor Sam Altman’s stake in the company to around $1.4 billion.

Driving Reddit’s financial success was a 56% rise in third-quarter ad revenue compared to the previous year. Licensing deals with tech giants Google and OpenAI, valued in the tens of billions of dollars, also bolstered Reddit's financial performance. CEO Steve Huffman hinted at more potential AI-related partnerships during a call with investors, indicating ongoing discussions on new deals.

In response to Reddit's stellar performance, analysts from Deutsche Bank, Bank of America, JPMorgan, and Jefferies have raised their price targets for Reddit stock, with some setting the target as high as $120. Jefferies analysts underscored the growth by highlighting Reddit's fourth consecutive increase in advertising revenue, which signals promising monetization opportunities amid steady user growth.

Reddit's success also had a ripple effect on other social media stocks. For instance, Snap's stock surged nearly 16% after it reported earnings that exceeded expectations. Snap's CEO, Evan Spiegel, noted that the number of direct advertisers on the platform had more than doubled in the third quarter compared to the previous year, contributing to the company's robust financial performance.