Reddit’s slowing user growth tests Wall Street’s sky-high expectations

The social media platform pointed a finger in Google’s direction for its underwhelming eyeballs.

2/12/25 5:49PM

Reddit’s tenure as an IPO and social media darling received a startling downvote on Wednesday after the site reported disappointing user growth last quarter, sending shares on a 16% downward spiral in after-hours trading.

The site’s daily active users, a key growth metric for the company, rose 39% to 101.7 million in the fourth quarter, missing Wall Street estimates of 103.8 million. Reddit pointed to a change in Google’s search algorithm during the quarter, which made for “some volatility” that has since subsided, the company said.

Reddit had previously benefited from deals with Alphabet’s Google and OpenAI that put its pages higher in search and ChatGPT results, bringing in new users. The tough part, though, has been getting those logged-out users — who typically spend less time on the site, thus carrying less ad revenue — to actually make an account. The majority of Reddit’s daily active users aren’t logged in, making up 55% of those that visited the platform daily in Q4.

The site’s slowing user growth now brings its strikingly steady rise into question. Unlike a host of other platforms that have rapidly skyrocketed in popularity only to fall just as quickly, losing users’ interest just years if not weeks later, Reddit has seen gradual growth since coming online two decades ago.

The platform beat on revenue, however, reporting quarterly sales of $427.7 million, up 71% from a year prior and above estimates of $405.5 million according to analysts polled by Bloomberg. Adjusted earnings per share of $0.85 also handedly exceeded forecasts for $0.48.

Part of that growth comes from its booming ad business, which rose 60% on the year to $394.5 million in the fourth quarter, coming in above estimates of $367.3 million. Its “other” revenue, which includes its comparatively small but growing AI licensing business, missed estimates to total $33.2 million, making up about 8% of the company’s total revenue for the quarter.

Looking forward, the company said it expects revenue to range from $360 million to $370 million for the current quarter, above analyst expectations of $359 million.

Kelly Cloonan is a journalist who has written for Business Insider and Fast Company.

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Google invests $75 million in film studio A24, forms AI partnership

Google is investing roughly $75 million in independent film studio A24 as part of an AI partnership, according the Wall Street Journal. The investment marks Google’s first direct stake in a film studio.

Under the agreement, A24 will work with Google DeepMind to develop and test AI tools for filmmaking and production workflows, the Journal reports.

The deal comes as A24 continues to expand its business beyond indie films into television, music, and live events. Since its 2013 launch, the studio has produced Oscar-winning films such as Everything Everywhere All at Once. Its revenue has more than doubled over the past two years, according to the Journal, and the company was last valued at $3.5 billion in a Thrive Capital-led funding round in 2024.

Google’s investment comes as major technology companies increasingly deepen ties with media companies as generative AI tools become more integrated into creative industries. For Google, the partnership also expands DeepMind’s reach into entertainment and film production.

The firm and TV industry is pushing to develop AI tools that can be integrated into the time-consuming and expensive production process. In a sign of the potential value of such tools, in March, Netflix announced it would acquire Ben Affleck's startup InterPositive, which is building AI film-making tools, for $600 million.

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Getty Images surges following OpenAI partnership

Getty Images is surging in early trading after the company announced a multi-year licensing and product partnership with OpenAI.

Under the agreement, OpenAI will license Getty’s library of images, videos, and metadata for use in training and improving its AI models, while Getty will integrate OpenAI’s generative AI tools into its own products and services.

The deal comes as Getty faces growing pressure from generative AI tools that can create stock image-like images in seconds, threatening parts of its traditional licensing business. Getty posted revenue of $226.6 million in Q1, down 2.5% year over year on a currency-neutral basis.

Getty was one of the earliest major content companies to challenge AI firms in court, suing Stability AI in 2023 for allegedly scraping millions of copyrighted images without permission to train image-generation models.

The OpenAI deal follows Getty’s 2025 licensing agreement with Perplexity, which gave the AI search company access to Getty’s library and required image credits with links to original sources.

Before the announcement, Getty shares had been trading below $1 for months. The stock surged by 124% in early trading, erasing its year-to-date losses as investors are waiting to see if Getty can turn its licensed content library into a more valuable AI asset.