TheChek News Flow

The Takeaway

Reddit’s explosive revenue growth of the past two years turbocharged the company’s stock after its 2024 initial public offering, lifting it nearly 700% to its highs of around $270 last fall. That rally was markedly different from the tepid performance that similarly sized social media companies such as Snap and Pinterest endured after their public debuts in 2017 and 2019, respectively.

In hindsight, that’s not surprising. Reddit’s IPO turned out to be underpriced relative to its growth potential, giving it much more room to rise. The stock went public at around six times forward sales, well below where either Snap or Pinterest went public, according to Koyfin data. And while Snap, in particular, showed signs of weakening user growth within a few months of its public debut, Reddit’s advertising business unexpectedly took off. Total revenue rose 62% in 2024, much more than expected at the time of the IPO, and another 69% in 2025. But lately one set of metrics—growth in the most engaged U.S. users in 2025—has painted a more sobering picture. And it likely helps explain why Reddit stock has fallen 42% in the past five weeks.

The number of Reddit daily users in the U.S. who are “logged in” to the service—meaning they’ve signed up for accounts, so Reddit recognizes them and knows their preferences—flatlined in 2025 at 23 million, after rising from 15.2 million at the start of 2023. Meanwhile, the number of people who arrived at Reddit from a web search, a group known as “logged-out” users, grew 8.9% in 2025. (See below chart).

Advertisers prefer logged-in users, who tend to spend more time on a service than people who arrive at Reddit from a web search. And the U.S. is the biggest ad market, so U.S. users are the most important. As user growth is a leading indicator of revenue growth, investors have good reason to worry about the slowdown.

Reddit, however, has argued lately that the distinction between logged-in and logged-out users is becoming less important. Its executives say they are using AI to make Reddit feel “more personalized and useful” for logged-out users, aiming to get them to return and spend more time on the service. Reddit recently said it would stop reporting the two categories of users.

By the way, while much was made at the time of Reddit’s IPO of its potential to make money licensing content to AI firms, that hasn’t proved a big business. In 2024, Reddit’s advertising revenues rose 50% to $1.2 billion, while other revenue—including AI-related licensing—was just $114.7 million. Last year, advertising rose 74% to $2.1 billion while other revenue expanded just 22% to $140 million.

In a statement, Reddit’s chief communications officer Adam Collins said Reddit was “the fourth most visited site in the U.S. and the sixth globally, with daily user growth accelerating faster than many of our peers in 2025.” He added that “most of our continued growth will come from product evolution, as has been the case in the past.”

Internationally, things have remained healthier, although even there a slowdown is evident. The number of logged-in users outside the U.S. rose 6.6% to 25.8 million in the first quarter of 2025 from the fourth quarter, but only another 7.4% in the next three quarters.