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Reddit Stock Sinks as Weak Outlook Overshadows 53% Revenue Jump
Reddit shares fell about 17% early Friday after the company forecast fourth-quarter revenue of $1 billion to $1.03 billion, below Wall Street's roughly $1.05 billion estimate. Daily active unique visitors of 130.3 million missed estimates, and U.S. daily active users fell 2% to 50.7 million.
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What happened
Reddit shares fell about 17% early Friday after the company forecast fourth-quarter revenue of $1 billion to $1.03 billion, below Wall Street's roughly $1.05 billion estimate. Daily active unique visitors of 130.3 million missed estimates, and U.S. daily active users fell 2% to 50.7 million.
Confirmed
Global impact / market context
A weaker revenue forecast and fewer users mean advertisers may spend less on Reddit, slowing sales growth and pressuring profit per sale. Search referrals falling by over one million per week adds risk because less traffic can reduce ad impressions and revenue.
Analyst inference
The 17% share drop signals investors are focused on future growth rather than the strong third quarter, when revenue rose 53% to $895 million. A company can beat past estimates yet still fall if its outlook for the next quarter disappoints.
Analyst inference
What to watch
- Reddit plans to test a login requirement in selected international markets during the fourth quarter, which means some visitors would need an account to access content. Confirmed
- Watch whether the login test changes user numbers, since requiring accounts could reduce casual visitors but may improve ad targeting and revenue per user over time. Proposed
- Track search referral traffic and U.S. daily active users next quarter, because continued declines could lower advertising demand and pressure the fourth-quarter revenue forecast. Analyst inference