Reddit Stock Climbs After Report Shows 8% User Growth in August

Reddit Inc. (NYSE:RDDT) shares rose 1.5% in premarket trading on Tuesday following a report from Piper Sandler indicating the social media platform's user base grew 8% month-over-month in August, marking its highest monthly growth rate this year.

Key User Metrics

According to the data from Piper Sandler, the August user growth represents a significant rebound from a 2% decline observed in July. The year-over-year audience growth also accelerated, reaching 18.0% in August compared to 12.8% in the prior month.

The gains were primarily driven by a 79 million increase in "Feed users," which more than compensated for a 1 million decline in "Conversation users," the report noted.

Diverging Regional Trends

A closer look at the data reveals diverging trends between domestic and international markets. While U.S. user growth decelerated to 5.2% in August, international user growth surged to 29.3%, a sharp increase from 19% in July.

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This acceleration in international markets suggests that Reddit's global expansion strategy is gaining significant momentum, a key factor for investors monitoring the company's long-term growth trajectory.

Context and Outlook

The positive user data comes as Reddit prepares for a significant change in its audience reporting. Piper Sandler noted that the company is implementing changes to its ads manager model.

This operational shift is expected to cause a one-time reset of approximately 20% to its reported audience size. Investors will be watching to see how this adjustment impacts future growth metrics and advertising revenue.