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Reddit (RDDT) is expected to announce second-quarter results on Tuesday, August 6 after the market close, with a conference call scheduled for 5:00 pm EDT. What to watch for:

GUIDANCE: Shares of Reddit were down 1.1% on Monday afternoon ahead of the social media platform's second-ever quarterly earnings report as a public company on Tuesday. In May, Reddit reported a Q1 loss per share of ($8.19) against estimates of ($8.71) on revenue of $243M vs. estimates of $212.83M. DAUq increased 37% year-over-year to 82.7 million. For Q2, Reddit forecast Q2 revenue $240M-$255M and adjusted EBITDA flat to $15M. The May consensus was $223.83M, but that has since ticked higher to $278.69M.

Other publicly traded companies in the social media space include Meta Platforms (META), Pinterest (PINS), and Snap (SNAP).

OPENAI PARTNERSHIP: On May 16, OpenAI announced a partnership with Reddit to bring its content to ChatGPT and new products. Bernstein said it expects the OpenAI partnership will bring 500-800bps of revenue contribution starting in Q3. Q2 data continues to track well, with web traffic up 38% year-over-year in Q2, with Google (GOOGL) the primary source of traffic. The real test for Reddit should come in Q3, as the company laps Google's algorithm changes affecting web traffic and ad dollars, Bernstein added. Loop Capital estimates the net value of the deal to be $40M-$50M per year as OpenAI will license Reddit's data and become a Reddit advertising partner while Reddit will bring OpenAI features to Reddit.

Needham said that its projected data licensing revenue has nearly doubled since its initiation report, thanks to the company's new 3-year deal with OpenAI, which should add to Reddit revenue and free cash flow beginning in Q3 of this year.

'EXCITED' BY GROWTH STORY: LightShed Partners on August 5 initiated coverage of Reddit with a Buy rating and $84 price target. The firm noted that it had walked out of Cannes Lions in late June "excited by Reddit's growth story, with ad buyers openly discussing their interest in the platform" in its initiation of the stock. Loop Capital, meanwhile, upgraded Reddit to Buy from Hold with an unchanged price target of $75 on August 1. The shares have retreated almost 20% since July 15 and are now trading at 7.8-times Loop's 2025 estimated revenue, the analyst said. With the price target now offering 23% upside potential, the firm upgraded the shares. Loop continues to believe that there is likely upside to the Street's 2024 and 2025 estimates.

'STABLE' AD MACRO: Raymond James raised the firm's price target on Reddit to $70 from $65 and keeps a Strong Buy rating on the shares ahead of the quarterly earnings report. The firm said the ad macro is stable and sees room for a clean low single-digit beat and raise provided encouraging traffic and download trends plus data and ads, the analyst told investors in a research note.

TEAMING WITH SPORTS LEAGUES: Reddit is teaming up with sports leagues including the NFL, NBA and MLB to get videos and other content for its social media site, The Information's Sahil Patel reported on July 22. Reddit will use the content to draw advertisers and then share the revenue it generates with the sports leagues, Patel wrote.

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