** Reddit RDDT.N missed market estimates for daily active unique visitors in the fourth quarter on Wednesday, hit by a change in Google's search algorithm
** Shares of the social media firm down 10.4% to $194.1 in premarket trading
GOOGLE ALGO BLIP DIP IS TEMPORARY
** Citigroup ("Buy," PT: $220) says changes in Google algorithm temporarily impacted logged-out daily active unique visitors
** Adds Reddit "scrollers" are benefiting from improved machine learning ranking and feed personalization, while "seekers" append "Reddit" to Google Search queries and are increasingly searching on platform
** Morgan Stanley ("Overweight," PT: $210) bets on Reddit's advertising and engagement innovation pipelines; believes the company has better segmented user cohorts (scrollers vs seekers) and continues to improve its features to better the search experience
** J.P.Morgan ("Neutral," PT: $185) sees RDDT achieving strong revenue and profitability growth from diversified ad formats, but notes risks from potential changes in Google's search algorithms
** BoFA ("Neutral," PT: $190) said Reddit has untapped assets like ads in comments, search ads, and video ads, which warrant a higher multiple vs peers, but expects ad growth deceleration in 2H, a valuation risk
** Growth outlook remains strong given AI opportunity around Reddit content, rapidly growing international users, untapped assets & potential for higher ad pricing, adds Bofa
(Reporting by Kritika Lamba in Bengaluru)
((kritika.lamba@thomsonreuters.com))
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