Reddit Shares Drop After Missing User Growth Expectations Despite Strong Revenue

The platform's Q4 results exceeded earnings forecasts but fell short on daily active user targets, attributed to a Google algorithm change.

Reddit reported Q4 revenue of $428 million, a 71% year-over-year increase, surpassing Wall Street's $405 million estimate.
Daily active unique users grew 39% to 101.7 million but missed the projected 103.3 million, contributing to a sharp stock decline.
CEO Steve Huffman attributed the user shortfall to a Google search algorithm update, which primarily affected logged-out users, though traffic has since recovered in Q1 2025.
AI content licensing deals with Google and OpenAI now account for 10% of Reddit's revenue, while advertising remains its primary income source.
Despite the stock drop, analysts highlighted Reddit's strong ad revenue growth and international expansion as positive long-term indicators.