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

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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.

Amazon Shares Drop as Cloud Growth Misses Expectations

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Amazon’s stock fell by 4% on Friday after the company’s quarterly cloud computing revenue growth fell short of investor expectations. The disappointing results reflected a slowdown in growth at Amazon Web Services (AWS), which posted a 19% increase in revenue to $28.79 billion. This figure was slightly below the anticipated $28.87 billion. The performance echoed similar disappointments from other major tech giants, including Microsoft and Alphabet, who also saw cloud revenue growth fail to meet expectations.

The missed expectations came as cloud companies, particularly those heavily investing in AI, are under greater scrutiny. AWS’s growth rate matched that of the previous quarter, raising concerns among analysts about potential capacity constraints or other unidentified issues.

The disappointing results led to a $100 billion drop in Amazon’s market value. However, Amazon’s stock has still risen about 4% in 2025, outpacing losses seen by Microsoft and Alphabet, whose stocks have fallen by 3%. Despite this drop, Amazon’s shares continue to be favored by analysts, with 68 recommending buying the stock and no analysts advising to sell.

Qualcomm Shares Fall on Downbeat Forecast for Licensing Business

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Qualcomm’s (QCOM.O) shares dropped by around 5% in early trading on Thursday following a disappointing forecast for its patent licensing business, despite strong expectations for quarterly sales and profits. The chipmaker revealed that its licensing business, which contributed 14.8% to its total revenue in the reported quarter, would experience no sales growth this year due to the expiration of its agreement with Huawei Technologies (HWT.UL).

TD Cowen analysts had initially expected the removal of Huawei’s royalty payments to have a mild impact, but they noted that the development adds to the “wall of worry” surrounding Qualcomm’s stock. However, analysts pointed out that Qualcomm has secured licensing agreements with two other Chinese smartphone manufacturers, which may help mitigate some of the losses.

The company’s first-quarter performance exceeded expectations, driven by strong demand for AI features in mobile devices, and is often seen as a barometer for broader smartphone industry trends. Qualcomm’s second-quarter sales forecast of $10.75 billion, with adjusted profits of $2.80 per share, surpassed analysts’ estimates of $10.34 billion and $2.69 per share, respectively, as reported by LSEG data.

While Qualcomm credited growth in its smartphone division to strong sales from China, powered by government subsidies and flagship smartphone launches, it also highlighted positive performance across other business segments, including handsets, autos, and IoT.

Despite gains in 2024, Qualcomm’s stock has underperformed AI chip leader Nvidia (NVDA.O), whose shares surged by 171%. Qualcomm’s stock has increased by 6% this year, far surpassing the losses seen by competitors like Intel (INTC.O), which saw a 60% decline, and Advanced Micro Devices (AMD.O), which dropped by 18%.

As a result of the company’s outlook, Qualcomm’s median price target decreased slightly to $192, down from $199 prior to the report, according to LSEG data. The company’s forward price-to-earnings ratio stands at 15.02, significantly lower than Nvidia’s 27.64 and Intel’s 32.21.