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Yahoo
01-04-2025
- Business
- Yahoo
Reddit's success may be inextricably tied to Google Search
Reddit has grown since going public last year, but some analysts fear it may be too closely tied to Google. Redburn Atlantic analysts warned Reddit's reliance on Google traffic and logged-out users may limit its long-term value. Reddit's stock has been volatile, affected by Google's algorithm changes and rumors of a Google deal. Reddit is growing quickly, but — like many media companies — it's struggling to separate itself from Google. Wall Street analysts from Redburn Atlantic rated Reddit "sell" on March 17 after saying in a note that the company's "potential, breadth of appeal and thus value as a company are being overstated," according to Bloomberg. James Cordwell and Joseph Barker, analysts for the firm, said that much of Reddit's growth over the past few years has been "misconstrued" because it came from logged-out users as the main driver, with many of those users coming from Google's algorithm, according to the outlet. Reddit CEO Steve Huffman has repeatedly said that people are going to Google more with the intention of ending up on Reddit. But the Redburn analysts say this trend could lead to more logged-out user growth than logged-in user growth. Reddit's daily active users who are logged in to their accounts were up 27% last year, but the same metric was up by 70% for people who were logged out, BI previously reported. "Accelerated user growth has been driven predominantly by logged-out users who arrive on the platform largely via Google Search," the Redburn analysts wrote. "These users are much less valuable to Reddit as they are typically just looking for an answer to a query and thus spend little time on the platform." Cordwell and Barker added that there is "clear evidence" that the boost to traffic from Reddit's recent changes is "hitting a ceiling, with a risk that what Google giveth, it will taketh away," according to Bloomberg. Redburn did not return requests for comment from Business Insider. A spokesperson for Reddit noted that the majority of analysts have maintained their "buy" rating for the company and that the experience for logged-in user has been driven by improvements to the platform. Jen Wong, Reddit's COO, recently described the relationship with Google as "symbiotic." "People are using Google to get to Reddit," she said at the Morgan Stanley Technology, Media, and Telecom Conference in March. "When I view it like this, I don't view it as existential; we have these two sources of traffic. It's not existential for us, but it is some chop that we managed through." Reddit has seen tremendous growth over the past year since going public in March 2024, but its stock has seen some volatility in recent months. On February 12, Reddit's stock dropped more than 15% after Huffman said in an earnings call that a tweak to Google's algorithm caused "volatility" in site traffic. He added that "traffic from search has recovered so far in Q1, and we've regained momentum. What happened wasn't unusual." On March 17, Reddit's stock jumped again after Reuters published an article that it later retracted, which said Google and Reddit had entered a new partnership. Reuters said in an update that the post was based on outdated information. Reddit users reacted to the post in r/stock, a community where users discuss stocks, market news, and finances. "Wild. There was just like a 10% pump and it instantly dropped back down. Is Wall Street Bets on this stock or something?" one user wrote in a comment about the article. Another user said in the comments they see many Google search results that use Reddit information. The user wrote that it is "insane how Google has basically sold out its Search function to operate as the Reddit search bar." "Most of the time when you Google something now you're either shown a list of Reddit pages or given an AI overview that uses Reddit to write the answer," the user wrote. Read the original article on Business Insider
Globe and Mail
07-03-2025
- Business
- Globe and Mail
Is Meta Platforms Stock a Buy, Sell, or Hold Ahead of Llama 4 Launch?
Meta Platforms (META) is up nearly 22% over the past year, but shares are more than 15% off their 52-week high. However, investors may have reason to continue betting on META shares as the company gears up for the unveiling of its Llama 4 artificial intelligence (AI) model. The company says its latest model includes significant technological advancements, and it plans to release Llama 4 in April 2025. During the Morgan Stanley Technology, Media, and Telecom Conference, Meta's Chief Product Officer Chris Cox cited Llama 4's ability to empower AI agents, software capable of performing complex, multi-step tasks autonomously. Additionally, Meta will be holding its first LlamaCon AI Conference on April 29. Experts believe that Meta's AI efforts, like a standalone app for Meta AI rumored to release in Q2 2025, would bolster its competitive edge in the space for generative AI. About Meta Platforms Stock Meta Platforms (META) is a social media and online advertising giant with Facebook, Instagram, WhatsApp, and Messenger in its stable. It has a base in Menlo Park, California, and a market capitalization of $1.6 trillion. META stock has registered a strong three-year return of 234%, outpacing those of the S&P 500 Index ($SPX). Meta's valuation compares favorably with high-tech peer companies. It has a trailing P/E ratio of 27.4x and a forward P/E ratio of 24.6x. Return on equity is 38.17%, and return on assets is 25.3%. Meta Platforms Beat on Earnings Meta reported Q4 revenue of $48.39 billion, a year-over-year increase of 21%, surpassing expectations. Full-year revenue totaled $164.50 billion, a growth rate of 22% from 2023. Net income surged 49% year-over-year to $20.84 billion for the quarter and 59% for the full year, reaching $62.36 billion. Diluted EPS for Q4 2024 came in at $8.02, marking a 50% increase from the previous year and exceeding Wall Street expectations of $6.68 by 20.06%. Operating margin expanded substantially from 41% to 48% in Q4 and from 35% to 42% for the year. Meta's portfolio of apps, including Facebook and Instagram, saw year-over-year growth in ad impressions by 6% in Q4 and by 11% for 2024. Average ad pricing increased by 14% in the quarter and by 10% for the year, driving top-line growth. Capital deployment by the firm was cautious, with capital expenditure at $14.84 billion in Q4 and $39.23 billion for the year. In return, investors received substantial capital back from Meta, with it completing $29.75 billion in share repurchases and paying out $5.07 billion in dividends in the year. Meta predicts Q1 2025 revenue between $39.5 billion and $41.8 billion, implying year-over-year growth of 8%-15%. Management is optimistic about additional revenue growth in 2025, citing continued investment in AI and automation as drivers. What Do Analysts Expect for Meta Platforms Stock? Meta has a 'Strong Buy' consensus rating from 53 different analysts, with a mean rating of 4.66 out of a possible 5. Analysts' price targets indicate a lot of room for upside. The top target value is $935, and the average price target is $747.70, representing 19% upside from current levels. Most analysts expect a bullish trend for Meta, with a total of 45 recommending it as Strong Buy.
