May 28, 2024

The Reddit logo at the New York Stock Exchange

The Reddit logo at the New York Stock Exchange
Photo: Brendan McDermid (Reuters)

Reddit is not a profitable company. For its first earnings report since its initial public offering March 21, the company reported a $575 million quarterly loss. Eight of its last quarters have been in the red. This is still a company focused on growth, and the way it will increase its revenue, per it’s S-1 filing, is through “growth and engagement of our communities.” The platform had 82.7 million daily active users in the first three months of 2024, a 37% increase from the same time last year.

But one small problem with that stat is that most of that growth is coming from lurkers, or users who are not logged into Reddit. Sherwood News noticed that the social media site is seeing more growth from lurkers (48% year-over-year), than it is from users who are logged in (27%).

CEO Steve Huffman noted on the company’s earnings call — during which he took questions from some of those logged-in users — that a bump in Google search traffic was a big proponent behind the lurker growth, making clear to note that logged-in users are the “core of our business, the bedrock of our inventory,” and the type of highly engaged audience that it pitches to advertisers. Indeed, in the S-1, Reddit says that logged-out users are harder to quantify, “spend less time on the site, and do not monetize at the same rate as logged-in users.” A key risk, it noted, was that it wouldn’t be able to convert them into true-blue (red?) Redditors.

When an analyst asked what Huffman and co. planned to do about it, Huffman suggested that was the wrong question. Instead of a crusade, he said the company would be focused on better monetizing logged-out users.

“Those are users,” he said. “Those are human beings that are on a Reddit platform for various reasons. We just know that in any particular session, not everybody is looking to join a community and have a profound experience. Sometimes they just want an answer to the question and that’s okay.”

Reddit shares are up about 2% since the IPO.

Source link

Leave a Reply

Your email address will not be published. Required fields are marked *