Steve Huffman, Co-founder and CEO of Reddit, presented at the WSJ Tech Live conference on Montage Laguna Beach, California, on October 21, 2024 Speech.
Frederick J. Brown | AFP | Getty Images
reddit Stocks fell more than 6% on Thursday amid social media companies failing to reach Wall Street user estimates In the fourth quarter.
The company reported a 39% increase in daily activeness worldwide to 101.7 million, down from Wall Street’s estimated 103.1 million.
CEO Steve Huffman said in a letter to shareholders that Reddit has experienced some “volatility” in user growth due to changes in Google’s search algorithm. He noted that this adjustment occurs twice a year, mainly affecting logged-in users who have not accessed the site with an account, but search-related traffic has since returned to the first quarter.
“What happened is not uncommon – the referrals of searches fluctuate from time to time, and they mainly affect logged in users,” Hoffman wrote. “Our team has navigated many algorithm updates and has done so in effectively adapting to these latest changes.” very good.”
Despite disappointing user numbers, Reddit surpassed Wall Street’s up and down estimates during the period, with earnings per share of 36 cents and sales of $428 billion. Analysts for LSEG vote predict earnings per share of 25 cents and revenue of $405 billion. Sales also increased by 71% from a year ago.
Reddit also provided a more than expected revenue guide in the first quarter, with net revenue of about $71 million, or 36 cents per share.
Despite Google issues, many Wall Street analysts are still under stocks, and Morgan Stanley analyst Brian Nowak advises investors to buy DIPs. Wells Fargo analyst Ken Gawrelski maintained his overweight rating but said the stock’s full rebound could depend on a row of consecutive U.S. user growth.
“We love Reddit’s growth, but we’ll see balanced risk rewards,” wrote Bank of America’s Justin Post, citing overestimation, reliance on Google and potential revenue slowdowns later this year,” he cited the overestimation, a reliance on Google and a slowdown in potential revenue later this year. , this is the reason for his neutral rating.
Reddit’s stock has risen since its initial public offering in March 2024, at $34 per share. Stocks have grown 24% so far.
– Jonathan Vanian of CNBC contributes to the report
