Reddit Reports Strong Financials but Sees Decline in U.S. Daily Users, Leading to Stock Drop
Despite beating revenue and profit expectations with a 61% year-over-year increase in revenue to $805 million and net income of $253 million, Reddit's stock fell by 21%. The decline was attributed primarily to a drop in U.S. daily active uniques from 53.5 million to 53.2 million between the first and second quarters. The company reported strong global growth with total daily unique users reaching 130.3 million, up 18% year over year, and advertising revenue rising by 64%. Free cash flow also more than doubled to $261 million. However, U.S. user stagnation is a concern as the American audience accounts for about four-fifths of Reddit's total revenue. The drop in users was attributed partly to volatility in search referrals and uncertainty around referral traffic sources. CEO Steve Huffman noted that while logged-out visitors grew by 10%, logged-in users only increased slightly, signaling potential challenges with user engagement.
Topics: profit revenue stock_price_reaction user_growth