Jeffries analysts believe Reddit (NYSE:RDDT)'s third quarter financial results could exceed Wall Street expectations, and the company could boost its outlook, when it reports on October 30.
In a note to clients on Friday, the analysts wrote that strong advertising indications suggest Reddit continues to benefit from faster growth in performance products and small/mid-sized customers.
They expect Reddit’s average revenue per user (ARPU) to remain the key driver of its revenue growth and see revenue upside coinciding with the company’s continued cost discipline and peer-leading earnings before interest, taxes, depreciation and amortization (EBITDA) growth.
The analysts added that their web traffic data showed a return to week-over-week growth in the US throughout October, supporting a continuation of quarter-over-quarter daily active user growth for the company in Q4.
Jeffries has a ‘Buy’ rating on Reddit stock.
Reddit shares gained nearly 5% in early trading on Friday.