Reddit Faces Logged-Out User Dilemma, Stock Drops
In a contrasting trend, Reddit's (RDDT) logged-in user base has declined since Q4 2023, with a majority of its visitors now being unauthenticated. This shift has impacted daily active user (DAU) growth, with the latest quarter marking the first decline in nearly two years.
Despite boasting a substantial DAU increase in its first earnings call as a public company, over 60% of the growth was attributed to logged-out users. Reddit CEO Steve Huffman attributed this to product improvements and increased Google traffic, particularly among those searching for genuine user-generated content.
However, the recent quarterly results fell short of DAU expectations, leading to a 9% stock decline. Reddit acknowledged the potential impact of search engine algorithm changes in its IPO filing, which have now materialized.
Despite the setback, Huffman remains optimistic, citing Reddit's value proposition as providing authentic human-generated content in an AI-dominated era. However, the company acknowledges that continued user engagement is crucial for its success.