Reddit Inc (RDDT  ) is set to report its earnings after the market closes on Tuesday, and analysts are predicting an increase in revenue compared to the previous quarter.

However, concerns loom over a potential widening of the company's net loss of $18.1 million. That's more than twice the $7.4 million it lost a year ago.

Revenue should rise to $311.5 million for the third quarter - up from $281.2 million in the second quarter.

Reddit On A Roll: Reddit made its long-awaited entry into the public markets earlier this year as the first major initial public offering of 2024. After pricing its IPO at $34 per share, the stock began trading on March 21 at $47. Since then, shares have surged over 77%.

Reddit's growth trajectory has been underpinned by:

  • Rising user engagement (i.e., the White House)
  • Stronger ad revenue: (positive results in 3 months. As of June 30. 2024, the company achieved a solid revenue growth rate of approximately 53.63%)
  • Advancements in AI: Alphabet Inc (GOOG  ) (GOOGL  ) struck a $60 million per year deal that gives Google real-time access to Reddit's data; Google, in turn, gets access to real-time Reddit data to train its artificial intelligence models.
What's The Catch: The San Francisco-based platform continues to face challenges in its path to profitability.

Higher operating costs, increased investments in infrastructure, and expanding content moderation efforts could weigh on the bottom line.

What Investors Will Be Listening For

Investors will be looking for any guidance on future financial performance and operational updates, as well as the company's AI plans, according to Bloomberg.

Expect analysts to draft commentary on how Reddit CEO Steve Huffman addresses progress on various topics, including:

  • Monetization strategies for developers
  • Ad revenue expansion
  • Premium services/Partnerships with sports leagues (MLB, NFL, NBA, PGA Tour and NASCAR)
  • Community-driven features like Reddit Coins - part of a rewards program that was reintroduced earlier this year.
With competitive pressures from other social media platforms and regulatory scrutiny on user data, the earnings call could set the tone for Reddit's market prospects heading into 2025.

Key points to watch include how the company plans to navigate the road to profitability in the long term.

Price Action: Reddit shares were up 0.2% at last check Monday, trading at around $81.57.