Reddit Stock Drops 17% on Disappointing User Growth

Reddit's stock plummeted over 15% after the company reported fourth-quarter earnings that highlighted slower-than-expected user growth. Daily active unique users increased by 39% year-over-year to 101.7 million, falling short of Wall Street's estimate of 103.8 million, raising concerns about its reliance on advertising revenue. Despite this, Reddit posted strong financial results with revenues of $428 million, a 71% increase from the previous year, and earnings per share of 36 cents, surpassing analyst expectations. CEO Steve Huffman attributed the user growth issues to fluctuations in traffic following a Google search algorithm update but expressed optimism about recovery in the following quarter. The company provided an upbeat forecast for Q1 2025, projecting revenues between $360 million and $370 million, indicating continued operational strength. Overall, while Reddit's user acquisition faced challenges, its financial performance remained robust, reflecting effective monetization efforts.