Key Highlights

● Reddit shares plunged after hours on October 29 despite a third-quarter beat.

● Third-quarter Revenue reached $895 million, topping the $874.9 million analysts expected.

● Fourth-quarter revenue guidance of $1.00 billion to $1.03 billion missed the $1.05 billion consensus.

● Pinterest, Roblox and Twilio also fell after hours in a wider growth-stock sell-off.

Reddit (NYSE:RDDT)'s revenue grew by more than half and beat forecasts, but a fourth-quarter outlook below consensus erased the good news in extended trading.

Strong quarter, sharp reversal

Reddit delivered a strong third quarter on Thursday, and investors sold it hard anyway. Shares of Reddit plunged in after-hours trading on October 29 after the Social Media platform's fourth-quarter revenue outlook fell short of expectations, overshadowing a beat on both Earnings and revenue.

After-hours moves shift through the evening and trade on thinner volume, and reports differed slightly on the size of the decline. But Reddit was clearly among the biggest losers after the bell.

The beat

The quarter itself was impressive. Adjusted Earnings Per Share came in at $1.40, ahead of the $1.33 consensus. Revenue reached $895 million, growing by more than half from a year earlier and topping the $874.9 million analysts expected.

Growth on that scale pointed to healthy Demand from advertisers during the quarter, and it gave the company a strong base heading into the year-end stretch.

The outlook that disappointed

The problem was the guidance. Reddit forecast fourth-quarter revenue of $1.00 billion to $1.03 billion, below the $1.05 billion consensus. For a stock priced for rapid growth, a guide that falls short, even by a modest amount, can trigger an outsized reaction.

The holiday quarter is the most important period of the year for digital advertising, so investors read the outlook as a key signal of advertiser appetite heading into year-end.

Social media's mixed evening

Reddit's slide was part of a wider after-hours sell-off in growth names. Pinterest (NYSE:PINS) fell after reporting earnings of $0.46 per share against $0.49 expected, revenue of $1.17 billion against $1.21 billion, and fourth-quarter adjusted EBITDA guidance below estimates. Roblox (NYSE:RBLX) and Twilio (NYSE:TWLO) also tumbled after the bell, while Amazon (NASDAQ:AMZN) and Intel (NASDAQ:INTC) slid on their guidance.

The regular session had painted a different picture for social media. Meta Platforms (NASDAQ:META) rose after one prominent hedge Fund Manager called it "incredibly undervalued" in a television interview, according to market data. And Alphabet (NASDAQ:GOOGL), whose Advertising revenue of $82 billion missed an $83.4 billion estimate, suffered its worst day since its 2004 IPO.

The broader market

The S&P 500 slipped 23.59 points to 7,720.39, and the Nasdaq Composite lost 365.13 points to 26,184.72 as Alphabet's plunge weighed on technology. Communication services, home to Alphabet, Meta and Reddit, was the worst-performing S&P 500 sector by a wide margin.

The rest of the market was stronger. More than 400 S&P 500 members rose, and the Russell 2000 gained 28.71 points to 2,859.22. NYSE advancers outnumbered decliners by 1.95 to 1. One market strategist said, "Money is rotating within the market rather than leaving it."

After the close, Nasdaq-100 futures slid on Amazon and Intel, while Dow futures edged up, according to market data.

For Reddit, the after-hours slide was a reminder that a strong beat is no shield when the outlook disappoints, a theme that repeated across the evening's reports.

What to watch

Friday's regular session will show how much of Reddit's after-hours decline sticks once full trading resumes. Investors will parse management's commentary on advertising trends, user growth and the drivers behind the more cautious fourth-quarter outlook.

The bigger debate is whether digital advertising is cooling heading into the holidays. Alphabet's ad miss, Pinterest's soft guide and Reddit's outlook together raise that question, though Meta's rally shows investors are still willing to back select names.

Friday's Employment Cost index and the Federal Reserve's December 8–9 meeting, where futures lean toward a hike, will also shape the mood for high-growth stocks.