Reddit Shares Plunge 25% Following Third-Quarter Earnings Report
Yahoo Finance ·
Reddit shares plummeted another 25% after its third-quarter earnings report, trading 63% below their January peak. Despite a 53% revenue jump to $895 million, U.S. daily active users declined 2% year-over-year to 50.7 million, alongside a meaningful drop in search referral traffic. In response, B. Riley analyst Naved Khan maintained a Buy rating on Reddit but lowered his price target from $270 to $190, which still represents a 95% upside from current levels. The target relies on a below-average valuation multiple of 22x forward earnings, but future projections face risks from shrinking domestic user metrics and the upcoming Google data-licensing renewal set for the first quarter of 2027. Wall Street continues to monitor whether user figures will stabilize ahead of the next earnings release.
AI 시장 분석
Reddit (RDDT) shares plunged 25% in a single day after Q3 US daily active users fell 2% year-over-year and Q4 revenue guidance missed market estimates. B.Riley lowered its price target from $270 to $190 while maintaining a buy rating, analyzing a 95% upside potential. Investors should remain cautious about declining user trends, reliance on Google search traffic, and uncertainty regarding the 2027 data license renewal.
상승 영향
- AI — Reddit is positioned positively to generate additional revenue through data license renewals with companies like Google and the supply of AI training data.
하락 영향
- Growth Stocks — Investor sentiment across technology and platform growth stocks has cooled as Reddit's US daily active users dropped 2% and Q4 guidance missed expectations.
DYAX 전담 분석
Reddit reported Q3 revenue of $895 million, beating the top end of its guidance, but the margin of the beat narrowed and Q4 revenue guidance of $1 billion to $1.03 billion fell short of the consensus ($1.05 billion to $1.06 billion), sending the stock down 63% from its January peak. B.Riley noted that the forward P/E has dropped to around 15x, highlighting valuation appeal, but if risks regarding US user declines and Google search traffic dependency are not resolved, downward pressure on earnings estimates could mount.
The bullish scenario involves a rebound supported by defended profitability amid cheaper valuations, while the bearish scenario points to further declines driven by accelerating US user churn and Google contract renewal uncertainties. Key metrics to watch in the Q4 earnings release include whether US daily users rebound and the trajectory of Google traffic trends.
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DYAX Investor Sentiment
Bullish (Long) 37% · Bearish (Short) 63%
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