Reddit Blames Google Algorithm Change For Traffic Growth Slowdown

While Reddit's latest earnings report showed strong financial growth, the stock took a dip after concerns over a slowdown in traffic due to what the company blames on Google's algorithm changes.

The stock was down nearly 13% on Thursday.

Reddit's daily active users increased 39% year-over-year to 101.7 million, and fourth-quarter revenue surged 71% to $427.7 million.

But Reddit saw a dip in search visibility, which it attributed to Google's recent updates.

CEO Steven Huffman addressed the search-related issue, while emphasizing Reddit's commitment to being a trusted source of information: "We're focused on providing a best-in-class experience for finding community and trusted information."

To combat Google's algorithm update, Huffman suggested adding 'reddit' at the end of a search query, reported Investor's Business Daily.

Reddit users quickly adapted, with Google search results populating with the 'reddit' tagline.

"This particular swing was interesting, though, because we saw a corresponding increase in the query term 'reddit,' which suggests users are searching with the specific intent of reaching Reddit, and this propensity continues to rise," Huffman said.

Despite the search visibility challenges, Reddit's financial performance remains strong, with a full-year revenue increase of 62% to $1.3 billion.

Its adjusted EBITDA for Q4 rose to $154.3 million, reflecting a $131.2 million improvement.

Reddit's ad revenue reached $394.5 million, reflecting a 60% year-over-year increase.

For the full year, ad revenue totaled $1.2 billion, a 50% increase from 2023.

Reddit projected total revenue between $360 and $370 million for the first quarter of this year.