Reddit’s shares plummeted by 7% after the company reported weaker-than-expected user growth in the fourth quarter. CEO Steve Huffman attributed the decline to a recent Google search algorithm tweak, which affects logged-out users. Despite this, Reddit exceeded Wall Street’s earnings estimates and provided strong first-quarter guidance.
The company’s daily active users rose 39% from last year, reaching 101.7 million, below the estimated 103.1 million. However, revenue surged 71%, exceeding analyst predictions of $405 billion in sales. Net income nearly quadrupled to $71 million per share.
Analysts remain bullish on the stock, with Morgan Stanley’s Brian Nowak recommending a buy, citing Reddit’s growth potential despite some concerns about valuation and dependence on Google. Bank of America’s Justin Post, however, maintains a neutral stance due to high valuation and potential revenue deceleration later this year.
Source: https://www.cnbc.com/2025/02/13/reddit-shares-slump-on-daily-active-user-miss.html