Tencent Holdings Ltd (F:NNND) (HKG:0700) has offloaded shares of Reddit, Inc. (NASDAQ:RDDT) valued at approximately $88.5 million, according to a recent SEC filing. The transactions, which took place on November 19, involved the sale of multiple blocks of Class A Common Stock. Prices for these shares ranged from $129.27 to $138.02 per share.
The filing indicates that Tencent Holdings (OTC:TCEHY), through its subsidiary Tencent Cloud Europe B.V., sold a total of 606,438 shares. Following these transactions, Tencent's indirect ownership in Reddit decreased, with 7,701,032 shares remaining.
This move comes as Tencent Holdings continues to adjust its investment portfolio, having been a former 10% owner of Reddit. The sales were conducted through multiple transactions, with varying prices within the specified range.
In other recent news, Reddit has been making significant strides in its financial performance and growth trajectory. The social media platform reported a 68% increase in total revenue and a 56% rise in advertising revenue in its third quarter. Reddit's adjusted EBITDA was reported at $94 million, significantly higher than anticipated. Piper Sandler, Citi, B.Riley, Loop Capital, and JMP Securities have all reaffirmed their positive stance on the company, raising their price targets following the impressive results.
Citi emphasized Reddit's daily active user growth and platform enhancements as key growth drivers, while B.Riley and Loop Capital highlighted the company's healthy increase in revenue and robust core advertising business. Piper Sandler attributed Reddit's successful quarter to the company's performance in the U.S. market and the scaling of its data licensing operations.
These recent developments underscore the positive outlook for Reddit's continued growth and financial success. The company's strategic initiatives, such as the development of Reddit's advertising stack and user tools, are expected to further monetize the platform's user engagement and content. Reddit's user engagement has seen a significant increase, with total conversation page views rising by 40% year-over-year. The company also reported a notable improvement in profitability, achieving positive GAAP Operating and Net Income for the first time since the fourth quarter of 2023.
InvestingPro Insights
As Tencent Holdings adjusts its stake in Reddit, it's worth noting that Reddit's financial metrics and market performance paint an intriguing picture. According to InvestingPro data, Reddit's market capitalization stands at $23.93 billion, reflecting significant investor interest despite the company not being profitable over the last twelve months.
Reddit's revenue growth has been impressive, with a 48.7% increase in the last twelve months and a robust 67.87% growth in the most recent quarter. This strong top-line performance aligns with an InvestingPro Tip indicating that analysts anticipate sales growth in the current year.
The company's stock has shown remarkable momentum, with a 170.16% price return over the past year and a 139.53% return in the last three months. This surge has brought Reddit's stock price to 99.7% of its 52-week high, suggesting strong investor confidence.
However, investors should be aware that Reddit is trading at a high revenue valuation multiple, as pointed out by another InvestingPro Tip. This high valuation, coupled with a Price to Book ratio of 12.1, indicates that the market has priced in significant growth expectations.
For those interested in a deeper analysis, InvestingPro offers 17 additional tips for Reddit, providing a more comprehensive view of the company's financial health and market position.
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