NEW: Reddit Gets Throttled by Google During Earnings, Investors Yeet $RDDT Into the Abyss…

Reddit just got a reality check, and Wall Street wasn’t in the mood for excuses. Shares cratered more than 15% after the company reported fourth-quarter user numbers that didn’t quite hit the mark—because, technically, missing by 1.4 million daily active users is a capital offense when your stock has already ripped nearly 300% since its IPO.

(Source: Giphy) 

On the other hand, revenue was solid. Reddit pulled in $428 million, smashing analyst expectations of $405 million while earnings came in at 36 cents per share, obliterating the 25 cents per share the suits were expecting. But again, did that matter? Hell no. The only thing that mattered fumbled the bag as Reddit’s daily active uniques came in at 101.7 million, falling short of the Street’s 103.1 million estimate.

So with that, what’s the excuse this time? Well, apparently Google is. CEO Steve Huffman blamed the mess on a late-Q4 algorithm change that caused “volatility” in search-driven traffic. In other words, Google giveth, and Google taketh away. Reddit’s entire business model leans hard on search traffic funneling users into its vortex of dumpster fires and niche obsessions, so when the algorithm tweaks the wrong way, sh*t hits the fan. 

(Source: CNBC) 

Of course, Huffman tried to calm the masses, saying that search traffic has already rebounded in Q1, and that logged-in users—the real money makers—are still growing at a respectable 27% YOY. But investors weren’t in the mood for a pep talk from the man who runs the world's largest degenerate cesspool. They saw a company that’s been riding AI-fueled search traffic like a cheat code suddenly realizing that maybe relying on Google for survival isn’t the best long-term strategy.

However, to be fair, Reddit’s still growing at a ridiculous clip—71% revenue growth isn’t something to laugh at. But the stock had already been priced for perfection, and anything less than flawless execution was going to get punished.

(Source: Giphy) 

So with that, where does Reddit go from here? Well, if you believe Huffman, this was just a temporary blip, and Reddit is still on track to keep scaling. But if you think Google’s AI-driven search changes are about to throttle Reddit’s free traffic pipeline, then this could be the first crack in an overinflated hype balloon.

Either way, one thing’s clear: Reddit just learned the hard way that when you build your empire on someone else’s algorithm, you’re always one update away from disaster. For now, keep your eyes on Reddit, because you know as well as I do that there will be some “BTFD” energy this Thursday. As always, stay safe and stay frosty, friends! Until next time… 

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Stocks.News holds positions in Google as mentioned in the article.