Reddit Posts Solid Q4, Analysts Expect AI Language Translations To Grow Daily Active Users

Core Insights - Reddit Inc's shares declined despite reporting strong fourth-quarter results, with revenues of $428 million, a 71% year-on-year increase and a 23% sequential increase [1][2] - Daily active users (DAUs) reached approximately 102 million on average in the fourth quarter, showing solid user growth [2] Financial Performance - Reddit's fourth-quarter revenue growth accelerated to 71% year-on-year from 62% in the previous year, with total ad revenues reaching$ 395 million, up 60% year-on-year [4][5] - EBITDA exceeded expectations by $23 million, although revenue growth showed signs of tightening compared to the previous quarter [3][4] User Growth and Engagement - DAUs were reported at 101.7 million, reflecting a 39% year-on-year increase and a 5% sequential increase, with international DAUs growing by 46% [5] - The sequential decline in U.S. DAUs was attributed to changes in Google search algorithms, but international user growth remained strong [6][8] AI and Future Growth - Management highlighted improvements in machine learning models, particularly in content translation, which is expected to drive 40-50% of international user growth [3][5] - Analysts expressed increased confidence in Reddit's ability to sustain revenue growth above industry averages, supported by AI advancements and monetization efforts [7] Analyst Ratings and Price Targets - Piper Sandler raised its price target from$ 197 to $210 while maintaining an Overweight rating [10] - JMP Securities lifted its price target from$ 190 to $200, reiterating a Market Outperform rating [10] - Needham maintained a Buy rating and raised its price target from$ 190 to $220 [10] - Goldman Sachs and JPMorgan reiterated Neutral ratings, with Goldman raising its price target from$ 176 to $185 and JPMorgan cutting its target from$ 142 to $185 [10]