As the Q1 earnings season comes to a close, it’s time to take stock of this quarter’s best and worst performers in the social networking industry, including Reddit (NYSE: RDDT) and its peers.
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 strong Q1. As a group, revenues beat analysts’ consensus estimates by 2.4% while next quarter’s revenue guidance was 0.9% below.
In light of this news, share prices of the companies have held steady as they are up 2.1% on average since the latest earnings results.
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 $392.4 million, up 61.5% year on year. This print exceeded analysts’ expectations by 6.2%. Overall, it was a strong quarter for the company with EBITDA guidance for next quarter exceeding analysts’ expectations.
“Over 400 million people now come to Reddit each week—because when you want real opinions, you turn to real people,” said Steve Huffman, Co-Founder and CEO of Reddit.
Reddit scored the biggest analyst estimates beat and fastest revenue growth of the whole group. The company reported 50.1 million daily active users, up 20.7% year on year. Investor expectations, however, were likely higher than Wall Street’s published projections, leaving some wishing for even better results (analysts’ consensus estimates are those published by big banks and advisory firms, not the investors who make buy and sell decisions). The stock is down 16.9% since reporting and currently trades at $98.61.
Read why we think that Reddit is one of the best social networking stocks, our full report is free.
Best Q1: Nextdoor (NYSE: KIND)
Helping residents figure out what's happening on their block in real time, Nextdoor (NYSE: KIND) is a social network that connects neighbors with each other and with local businesses.
Nextdoor reported revenues of $54.18 million, up 1.9% year on year, outperforming analysts’ expectations by 1.8%. The business had a very strong quarter with a solid beat of analysts’ EBITDA estimates and an impressive beat of analysts’ number of weekly active users estimates.
However, the results were likely priced into the stock as it’s traded sideways since reporting. Shares currently sit at $1.50.
Is now the time to buy Nextdoor? Access our full analysis of the earnings results here, it’s free.
Slowest Q1: 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 $855 million, up 15.5% year on year, exceeding analysts’ expectations by 1%. Still, it was a mixed quarter as it posted EBITDA guidance for next quarter missing analysts’ expectations.
Pinterest delivered the weakest performance against analyst estimates in the group. The company reported 570 million monthly active users, up 10% year on year. Interestingly, the stock is up 14.7% since the results and currently trades at $31.98.
Read our full analysis of Pinterest’s results here.
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 $358.5 million, up 7.7% year on year. This number beat analysts’ expectations by 1.8%. Overall, it was a strong quarter as it also recorded an impressive beat of analysts’ EBITDA estimates and full-year revenue guidance meeting analysts’ expectations.
The stock is up 6.5% since reporting and currently trades at $38.05.
Read our full, actionable report on Yelp here, it’s free.
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 $1.36 billion, up 14.1% year on year. This result surpassed analysts’ expectations by 1.3%. It was a strong quarter as it also logged a solid beat of analysts’ EBITDA estimates and solid growth in its users.
The company reported 460 million daily active users, up 9% year on year. The stock is down 7.3% since reporting and currently trades at $8.44.
Read our full, actionable report on Snap here, it’s free.
Market Update
Thanks to the Fed’s rate hikes in 2022 and 2023, inflation has been on a steady path downward, easing back toward that 2% sweet spot. Fortunately (miraculously to some), all this tightening didn’t send the economy tumbling into a recession, so here we are, cautiously celebrating a soft landing. The cherry on top? Recent rate cuts (half a point in September 2024, a quarter in November) have propped up markets, especially after Trump’s November win lit a fire under major indices and sent them to all-time highs. However, there’s still plenty to ponder — tariffs, corporate tax cuts, and what 2025 might hold for the economy.
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.
Join Paid Stock Investor Research
Help us make StockStory more helpful to investors like yourself. Join our paid user research session and receive a $50 Amazon gift card for your opinions. Sign up here.
