Reddit is growing quickly, but – like many media companies – he has trouble separating from Google.
Wall Street analysts by Redburn Atlantic ranked Reddit “Sell” on March 17 after having declared in a note that the “potential, the company’s appeal extent and therefore the value as a company was overestimated”, according to Bloomberg.
James Cordwell and Joseph Barker, company analysts, have said that a large part of Reddit’s growth in recent years had been “misinterpreted” because it came from disconnected users as the main engine, including many of these users from Google algorithm, according to the point of sale.
Reddit CEO, Steve Huffman, said on several occasions that people were going more on Google with the intention of ending up on Reddit.
But Redburn analysts say that this trend could lead to more disconnected user growth than the growth of connected users.
The daily active users of Reddit who are connected to their accounts increased by 27% last year, but the same metric increased by 70% for those disconnected, previously reported Bi.
“The accelerated growth of users has been mainly motivated by disconnected users who arrive on the platform largely via Google Search,” wrote Redburn analysts. “These users are much less precious for Reddit because they are generally looking for a response to a request and therefore spend little time on the platform.”
Cordwell and Barker added that there is “clear evidence” that the strengthening of reddit recent changes in recent changes is to “hit a ceiling, with a risk that Google gives, it will take on”, according to Bloomberg.
Redburn did not return the requests for comments from Business Insider. A Reddit spokesperson noted that the majority of analysts have maintained their “purchase” note for the company and that the experience for the connected user was motivated by improvements to the platform.
Jen Wong, COO of Reddit, recently described the relationship with Google as “symbiotic”.
“People use Google to go to Reddit,” she said at the Morgan Stanley Technology, Media and Telecom conference in March. “When I consider it like that, I do not consider it as existential; we have these two sources of traffic. It is not existential for us, but it is a rib for we have succeeded.”
Reddit has experienced enormous growth in the past year since its public in March 2024, but its stock has experienced a certain volatility in recent months. On February 12, Reddit’s actions fell by more than 15% after Huffman said in a profit call that an adjustment of Google algorithm caused the “volatility” of site traffic.
He added that “research traffic has recovered so far in the first quarter, and we resumed the momentum. What happened was not unusual”.
On March 17, Reddit’s stock jumped again after Reuters published an article he retracted later, which said that Google and Reddit had a new partnership. Reuters said in an update that the message was based on obsolete information.
Reddit users reacted to the R / STOSE position, a community where users discuss actions, market news and finance.
“Wild. There was just a 10% pump and he instantly dropped. Is Wall Street in this stock or something?” A user wrote in a comment on the article.
Another user said in the comments they saw many Google search results that use Reddit information. The user wrote that he was “crazy about the way Google has essentially sold his search function to function like the Reddit search bar”.
“Most of the time, when you google, something, you now have a list of reddit pages or that you have given an AI preview that uses Reddit to write the answer,” the user wrote.
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