As the craze of earnings season draws to a close, here’s a look back at some of the most exciting (and some less so) results from Q3. Today, we are looking at social networking stocks, starting with Reddit (NYSE:RDDT).
Businesses must meet their customers where they are, which over the past decade has come to mean on social networks. In 2020, users spent over 2.5 hours a day on social networks, a figure that has increased every year since measurement began. As a result, businesses continue to shift their advertising and marketing dollars online.
The 6 social networking stocks we track reported a very strong Q3. As a group, revenues beat analysts’ consensus estimates by 2.9% while next quarter’s revenue guidance was 2.4% above.
Luckily, social networking stocks have performed well with share prices up 21.1% on average since the latest earnings results.
Best Q3: Reddit (NYSE:RDDT)
Founded in 2005 by two University of Virginia roommates, Reddit (NYSE:RDDT) facilitates user-generated content across niche communities (called subreddits) that discuss anything from stocks to dating and memes.
Reddit reported revenues of $348.4 million, up 67.9% year on year. This print exceeded analysts’ expectations by 10.6%. Overall, it was an exceptional quarter for the company with EBITDA guidance for next quarter exceeding analysts’ expectations.
“It was another strong quarter for Reddit and our communities as we achieved important milestones, including new levels of user traffic, revenue growth, and profitability,” said Steve Huffman, Co-Founder and CEO of Reddit.
Reddit pulled off the biggest analyst estimates beat and fastest revenue growth of the whole group. The company reported 48.2 million daily active users, up 50.6% year on year. Unsurprisingly, the stock is up 120% since reporting and currently trades at $179.94.
We think Reddit is a good business, but is it a buy today? Read our full report here, it’s free.
Yelp (NYSE:YELP)
Founded by PayPal alumni Jeremy Stoppelman and Russel Simmons, Yelp (NYSE:YELP) is an online platform that helps people discover local businesses through crowd-sourced reviews.
Yelp reported revenues of $360.3 million, up 4.4% year on year, in line with analysts’ expectations. The business had an exceptional quarter with an impressive beat of analysts’ EBITDA estimates.
The market seems happy with the results as the stock is up 9.5% since reporting. It currently trades at $39.81.
Is now the time to buy Yelp? Access our full analysis of the earnings results here, it’s free.
Weakest Q3: Pinterest (NYSE:PINS)
Created with the idea of virtually replacing paper catalogues, Pinterest (NYSE: PINS) is an online image and social discovery platform.
Pinterest reported revenues of $898.4 million, up 17.7% year on year, in line with analysts’ expectations. It was a mixed quarter as it posted an impressive beat of analysts’ EBITDA estimates but revenue guidance for next quarter slightly missing analysts’ expectations.
As expected, the stock is down 10.7% since the results and currently trades at $30.30.
Read our full analysis of Pinterest’s results here.
Snap (NYSE:SNAP)
Founded by Stanford University students Evan Spiegel, Reggie Brown, and Bobby Murphy, and originally called Picaboo, Snapchat (NYSE: SNAP) is an image centric social media network.
Snap reported revenues of $1.37 billion, up 15.5% year on year. This result surpassed analysts’ expectations by 1.1%. Overall, it was a strong quarter as it also recorded a solid beat of analysts’ EBITDA estimates.
The company reported 443 million daily active users, up 9.1% year on year. The stock is up 3.9% since reporting and currently trades at $11.32.
Read our full, actionable report on Snap here, it’s free.
Meta (NASDAQ:META)
Famously founded by Mark Zuckerberg in his Harvard dorm, Meta Platforms (NASDAQ:META) operates a collection of the largest social networks in the world - Facebook, Instagram, WhatsApp, and Messenger, along with its metaverse focused Reality Labs.
Meta reported revenues of $40.59 billion, up 18.9% year on year. This print was in line with analysts’ expectations. Zooming out, it was a satisfactory quarter as it also produced a solid beat of analysts’ EBITDA estimates but number of daily active people in line with analysts’ estimates.
The company reported 3.29 billion daily active users, up 4.8% year on year. The stock is up 5.2% since reporting and currently trades at $622.64.
Read our full, actionable report on Meta here, it’s free.
Market Update
Thanks to the Fed's series of rate hikes in 2022 and 2023, inflation has cooled significantly from its post-pandemic highs, drawing closer to the 2% goal. This disinflation has occurred without severely impacting economic growth, suggesting the success of a soft landing. The stock market has thrived in 2024, spurred by recent rate cuts (0.5% in September and 0.25% in November), and a notable surge followed Donald Trump’s presidential election win in November, propelling indices to historic highs. Nonetheless, the outlook for 2025 remains clouded by potential trade policy changes and corporate tax discussions, which could impact business confidence and growth. The path forward holds both optimism and caution as new policies take shape.
Want to invest in winners with rock-solid fundamentals? Check out our Top 5 Quality Compounder Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.
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