Reddit Shares Drop 23% Following Weak Revenue Guidance and Declining Search Traffic
Reddit (RDDT) reported third-quarter earnings that exceeded analyst expectations, with adjusted EPS of $1.40 against a $1.33 estimate and revenue rising 53% year-over-year to $895 million. Despite these beats, the stock plummeted in premarket trading due to a weak fourth-quarter revenue outlook and concerns regarding user growth. The company warned that search referral traffic is declining significantly, driven largely by Google's AI Overviews reducing visibility for logged-out users. This trend could lead to a low-double-digit percentage decline in daily active unique users (DAUs) in the fourth quarter. Consequently, major analysts at KeyBanc Capital Markets and Citizens have downgraded the stock, citing uncertainty regarding long-term revenue sustainability.
Topics: earnings report revenue guidance search referral traffic stock price plunge user growth deceleration
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Part of the story Reddit Shares Plunge 29% Following Weak Earnings and Declining Search Traffic (31 articles)