Reddit (NYSE:RDDT) shares on Wednesday after the company reported weaker-than-expected user numbers in its fourth-quarter earnings.
Earnings per share turned out to be 36 cents vs. 25 cents expected, on revenues of $428 million vs. $405 million expected
Global daily active uniques, or DAUq, rose 39% from a year earlier to an average of 101.7 million for the fourth quarter. That trailed Wall Street estimates of 103.1 million.
A Google search algorithm change caused some “volatility” with user growth in the fourth quarter, but the company’s search-related traffic has since recovered in the first quarter, Reddit CEO Steve Huffman said in a letter to shareholders.
“What happened wasn’t unusual — referrals from search fluctuate from time to time, and they primarily affect logged-out users,” Huffman wrote. “Our teams have navigated numerous algorithm updates and did an excellent job adapting to these latest changes effectively.”
Reddit has benefited from Google search updates and internal site improvements that have helped it gain a significant amount of new and returning users, which the social company refers to as logged-out users, over the past year and a half. Reddit has said it is working to convince logged-out users to create accounts as logged-in users, which are more lucrative for its business.
RDDT opened Thursday lower by $12.20, or 5.6%, to $204.27.
