Reddit Faces Traffic Dip Despite International Revenue Growth

Reddit's stock fell 6% after missing analyst expectations for daily active visitors, impacted by Google's AI-driven search changes. Despite a rise in international revenue and AI partnerships, user growth declined. Reddit trades at a high earnings estimate compared to competitors, with stock significantly outperforming since debut.

In early trading on Thursday, Reddit's shares dropped by 6% subsequent to missing Wall Street's projections for fourth-quarter daily active unique visitors. The dip was attributed to changes in Google's search algorithm, focusing on artificial intelligence summaries over traditional website links, said Susannah Streeter from Hargreaves Lansdown.

Despite challenges, Reddit CEO Steve Huffman announced traffic recovery in the first quarter, although user growth decelerated compared to previous quarters. The company recorded a 39% rise to 101.7 million visitors, not meeting analysts' prediction of 103.3 million, despite favorable revenue forecasts.

International revenue growth surpassed domestic performance, aided by machine learning translation advancements. Reddit benefits from content licensing deals with tech giants but saw no significant boost in Q4. The stock trades at 196.90 times forward earnings forecast against Snap and Pinterest, which are considerably lower.

(With inputs from agencies.)