Jefferies Sees Reddit Q4 Ad Growth Driving Beat-and-Raise, Shares Tumble
Jefferies expects Reddit to beat and raise on February 5 Q4 earnings, citing faster performance-based ad growth and higher adoption among small- and mid-sized advertisers. Shares plunged this morning after Adweek reported YouTube overtook Reddit as the primary AI model training data source.
1. Jefferies Analysts Anticipate Q4 Advertising Beat and Raise for Reddit
Jefferies analysts project that Reddit will surpass consensus expectations when it releases fourth-quarter results on February 5, citing proprietary checks showing a 35% year-over-year increase in performance-based ad product spend. The team highlights a 42% uptick in new campaigns from small- and mid-sized advertisers in December, driven by promotional offers and improved targeting tools. Jefferies also notes that Reddit’s self-serve platform experienced a 28% rise in daily active advertisers during the quarter, suggesting sustained pricing power and the potential for management to raise full-year guidance on the conference call.
2. Reddit Shares Slide Following Adweek Report on YouTube’s Data Supremacy
Reddit stock plunged roughly 8% in early trading after Adweek reported that YouTube has overtaken Reddit as the primary source of training data for leading AI models. Trading volume surged to 150% of the ten-day average, reflecting investor concern over Reddit’s competitive positioning in data licensing. Market participants point out that while Reddit has strengthened its ad offerings, the platform’s comparatively smaller corpus of video content may limit its appeal to AI developers seeking expansive multimedia datasets.