Reddit shares dropped. Hard. Investors watched. They were worried. The numbers did not look good. On Thursday morning, Reddit shares sank 13% in premarket trading. A big drop. A surprise for many.
What happened?
- Google changed its search algorithm.
- Fewer people found Reddit in search results.
- Daily active users did not grow as much as expected.
Investors saw trouble. They sold. Reddit shares tumbled.
Google’s Algorithm Change – A Hidden Danger
Reddit depends on Google. People search. They find posts. They click. But then, Google changed the rules.
- Reddit appeared less in searches.
- Fewer clicks. Fewer users.
- Growth slowed down.
This hit Reddit hard. Investors got nervous.
How Bad Was the Miss?
- Reddit had 101.7 million daily active unique visitors.
- Wall Street expected 103.3 million.
- They missed the mark.
Growth was still high at 39%, but not high enough.
What Did Reddit’s CEO Say?
Steve Huffman, the CEO, spoke up.
- He called it “an aberration.”
- He said traffic was already recovering.
- But investors did not care. They kept selling.
One Good Thing – Revenue Was Strong
Even with the bad news, Reddit made more money than expected.
- AI licensing deals with Google and OpenAI helped.
- Revenue was strong.
- First-quarter sales look good.
But investors only saw the user growth problem. And Reddit shares kept falling.
Is Reddit Overpriced?
Some experts say Reddit shares are too expensive.
| Company | Price-to-Earnings Ratio |
| 242.7 | |
| Snap | 28.8 |
| 20.7 |
A big difference. Reddit’s stock is high-priced. Maybe too high.
What Happens Next?
- Reddit says traffic is improving. Will investors believe it?
- AI deals bring money. But will it be enough?
- Google can change its algorithm anytime. Will Reddit suffer again?
Nobody knows. But for now, Reddit shares are falling.
