Reddit CEO Acknowledges Google Search Update's Impact On Traffic But Shrugs It Off: 'These Changes Happen All The Time'

On Wednesday, Reddit Inc. RDDT CEO Steve Hoffman confirmed that an update to Alphabet Inc.’s GOOG GOOGL Google’s search algorithm has impacted the platform’s traffic.

What Happened: During Reddit’s fourth-quarter earnings call, Hoffman said that Google’s periodic algorithm change affected traffic, particularly among logged-out users in the U.S. However, the impact was short-lived.

“These changes happen all the time. I’d say ballpark, twice a year, not the first, not the last,” Hoffman explained.

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“For us, it primarily affects logged-out users. This one was particularly interesting because it really was a swing—down, but then a recovery shortly thereafter. Happened right at the end of the quarter,” he added.

Despite the initial decline, Hoffman noted an increase in the search term “Reddit” on their search dashboard. He reiterated that Reddit began the first quarter on a strong note, with growth in search and overall traffic.

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Why It Matters: Reddit reported fourth-quarter revenue of $427.71 million, surpassing the consensus estimate of $405.26 million.

Reddit’s daily active unique users (DAUq) grew 39% year-over-year, reaching 101.7 million, while U.S. daily active users saw a slight quarter-over-quarter decline from 48.2 million to 48 million.

Hoffman also reported a 27% increase in logged-in users over the past year and a 46% rise in international engagement.

However, despite beating revenue and EPS expectations, Reddit’s shares experienced a decline possibly due to slowing user growth.

Price Action: Reddit’s stock dropped 13.24% in after-hours trading, landing at $187.80. Earlier on Wednesday, it closed at $216.47, gaining 1.27%, per Benzinga Pro data.

Image via Shutterstock

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Disclaimer: This content was partially produced with the help of Benzinga Neuro and was reviewed and published by Benzinga editors.