Reddit CEO Steve Huffman said that the company experienced some “volatility” in user growth as a result of a Google search algorithm tweak.
Reddit CEO Steve Huffman said that the company experienced some"volatility" in user growth as a result of a Google search algorithm tweak.The company reported a 39% rise in global daily active uniques from a year ago to 101.7 million, below the Wall Street estimate of 103.1 million.In a letter to shareholders, CEO Steve Huffman said that Reddit experienced some"volatility" in user growth as a result of a Google search algorithm change.
Despite the disappointing user figure, Reddit surpassed Wall Street's top-and-bottom line estimates for the period, with earnings of 36 cents per share on $428 billion in sales. Analysts polled by LSEG had forecast earnings of 25 cents per share and $405 billion in revenue. Sales also grew 71% from a year ago.Reddit also offered better-than-expected revenue guidance for the first quarter, while net income roughly quadrupled to $71 million, or 36 cents per share.
Many Wall Street analysts stood by the stock despite the Google issue, with Morgan Stanley analyst Brian Nowak recommending that investors buy the dip. Wells Fargo analyst Ken Gawrelski maintained his overweight rating, but said a full bounce back in the stock may depend on steady consecutive U.S. user growth.
"We like Reddit's growth but see balanced risk reward," wrote Bank of America's Justin Post. He cited a high valuation, dependence on Google and a potential revenue deceleration later this year among the reasons for his neutral rating. Reddit's stock has climbed since its initial public offering in March 2024 at $34 a share. Shares are up 24% year to date.Prenuvo adds new health tests to flagship full-body scan, raises fresh funding
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