RDDT: Reddit Stock Sinks 13% on Lower User Growth. CEO Says It’s Google’s Fault

Chat messaging platform topped analyst estimates for revenue and earnings per share. Lagging user growth tanked the stock.

⬇️ Reddit Shares Dive 13%

• Reddit stock RDDT plunged 13% after the social media platform posted its earnings report with some worrying figures in it. Reddit’s user numbers — daily active uniques — averaged 101.7 million for the quarter ending December, missing Wall Street’s consensus views of 103.1 million.
• The number still reflected a whopping 39% increase year over year but investors had hoped for even more growth. The shares are poised to open Thursday’s session at $187.80, down from $216.47.

🎯 Huffman Blames Google

• Reddit CEO Steve Huffman attributed the decline in user growth to a Google search algorithm, which had caused “volatility” in the company’s search traffic. “What happened wasn’t unusual — referrals from search fluctuate from time to time, and they primarily affect logged-out users,” Huffman said.
• “Our teams have navigated numerous algorithm updates and did an excellent job adapting to these latest changes effectively.” He also said that a “recovery happened right at the end of the quarter.”

⬆️ Revenue, Earnings Top Estimates

• The chat messaging platform (home to lots of day traders) picked up revenue of $428 million against $405 million expected. Earnings per share reached 36 cents a pop against 25 cents expected.
• Shares of Reddit have enjoyed elevated investor appetite. This year alone, they’re up more than 30% (not factoring in the implied drop at the opening bell). From the IPO last year, shares are up 370%.