Yazılar

Reddit Misses Daily Visitor Estimates Due to Google Algorithm Change, Shares Drop

/in /tarafından

Reddit (RDDT.N) fell short of market expectations for daily active unique visitors in the fourth quarter, impacted by a change in Google’s search algorithm that reduced its visibility in search results. This announcement sent Reddit’s shares tumbling 15% in after-hours trading on Wednesday.

The San Francisco-based company, which launched its IPO in March 2024, saw its stock surge nearly five-fold last year. However, volatility with Google search at the end of the fourth quarter affected traffic from “logged-out users”—those who browse without signing in, CEO Steve Huffman said in a letter to shareholders. Despite the setback, Huffman noted that traffic from Google search has since recovered in the first quarter of 2025.

Reddit’s daily active unique visitors grew by 39% to 101.7 million for the quarter ending December 31, but this fell short of analysts’ average estimate of 103.3 million, according to LSEG data. Growth has also slowed sequentially.

“Reddit shares are down due to missed expectations on daily active users, but it’s not a reason to lose faith in the company,” said Jeremy Goldman, senior director of briefings at eMarketer. He added that Reddit’s international expansion and AI advancements could help it become a digital advertising powerhouse.

Reddit has been leveraging AI deals with Alphabet’s Google and Microsoft-backed OpenAI, as well as conversation placement ads—where brands can advertise directly within subreddit discussions. These factors have helped Reddit forecast first-quarter revenue between $360 million and $370 million, surpassing analysts’ average estimate of $358.1 million.

The company reported fourth-quarter revenue of $427.7 million, beating the $405.3 million estimate, largely driven by holiday season ad spending. Profit per share came in at 36 cents, surpassing the 25-cent estimate. Reddit’s global average revenue per user increased by 23% to $4.21.

Additionally, Huffman mentioned ongoing discussions for data licensing deals with major industry players.

Google has yet to respond to inquiries about its algorithm changes.

Reddit’s Growing Dependence on Google Traffic Raises Concerns for Wall Street

/in /tarafından

Reddit’s increasing reliance on traffic from Google has Wall Street analysts concerned about the platform’s ability to convert those visitors into long-term, engaged users. The platform has seen a rise in registration rates, thanks to a simplified sign-up process and improved site speed, according to Reddit CEO Steve Huffman. The company also enhanced personalization features, helping to retain users once they sign up, leading to a 31% year-over-year increase in logged-in users during the second quarter.

Despite these improvements, some experts remain skeptical about the long-term viability of converting users who initially land on Reddit through Google search. The concern is that these users might only be interested in specific information and may not stay engaged with the platform beyond their initial query. With Google’s constant algorithm changes, there is also the risk that Reddit’s current traffic surge could be temporary.

Reddit acknowledges this risk, noting that any changes in search engine algorithms could negatively impact its traffic and overall business performance. The platform’s history of growth, driven largely by word-of-mouth rather than SEO, is seen as a strength, but the reliance on Google traffic remains a point of vulnerability.

As the situation develops, it will be critical to see if Reddit can maintain its user base and continue its growth without relying too heavily on traffic from Google, which remains unpredictable.