Reddit stock pops on earnings beat, strong guidance and $1 billion buyback

Shares of Reddit experienced a notable 6% increase in after-hours trading on Thursday, following the release of the company's fourth-quarter earnings report. This report not only surpassed expectations but also set an optimistic tone for the upcoming quarter of 2026. The company anticipates first-quarter sales to range between $595 million and $605 million, exceeding Wall Street's forecast of $577 million. Additionally, adjusted earnings for the same period are projected to fall between $210 million and $220 million, which is higher than the StreetAccount estimate of $203 million. Furthermore, Reddit unveiled a substantial $1 billion share repurchase initiative. In the fourth quarter, Reddit's revenue soared by 70% compared to the previous year, with net income reaching $252 million, marking a remarkable increase of nearly 255% year-over-year. In the U.S. market, the company recorded sales of $583 million, surpassing analyst predictions of $529 million. The platform's global daily active unique users (DAUq) rose by 19% year-over-year to 121.4 million, outpacing the expected 120 million. Specifically, U.S. DAUq grew by 9% year-over-year, reaching 52.5 million, slightly above the analysts' estimate of 52.3 million. Moreover, the number of logged-in U.S. DAUq users, those who have registered Reddit accounts, increased by 5% year-over-year to 23 million. However, this growth was slower compared to the 7% recorded in the previous quarter, during which logged-in U.S. DAUq stood at 23.1 million. Investors have keenly observed the logged-in DAUq figure, as registered users tend to be more valuable for Reddit's advertising efforts. These users typically engage more frequently with the platform than those who access it through external sources, referred to as logged-out DAUq. In an investor letter, CEO Steve Huffman announced plans to phase out reporting on the distinction between logged-in and logged-out users later this year. He noted that the gap between these user types has narrowed due to new features aimed at enhancing user engagement across the platform. "As the industry evolves, how we think about our product and users must evolve too," Huffman stated. "Historically, we've reported on logged-in versus logged-out users, but as our onboarding improvements blur the lines between these categories, the distinction becomes less relevant."