Reddit Stock Drops 15% as User Growth Misses Estimates

Reddit reported its fourth-quarter earnings, showcasing a 71% year-over-year revenue increase to $427.7 million, surpassing analysts' expectations. However, the number of daily active users reached 101.7 million, falling short of the anticipated 103.8 million, which led to a 15% drop in shares during extended trading. Despite this setback, Reddit's net income rose to $71 million from $18.5 million a year ago, exceeding forecasts. Analysts remain optimistic about Reddit's future, with expectations of first-quarter revenue between $360 million and $370 million, bolstered by AI content licensing deals. The company has successfully leveraged partnerships with tech giants like Google and OpenAI to enhance revenue through digital advertising. Overall, Reddit's performance reflects a mixed outlook, highlighting both growth opportunities and challenges in user engagement.