Piper Sandler “ignites” Reddit (RDDT.US): 8% user growth in August, the strongest monthly increase in the year

The Zhitong Finance App learned that Reddit (RDDT.US) rose by about 6% on Thursday and stopped falling for four consecutive years. Earlier, Piper Sandler said that the average number of users of the social media platform increased 8% month-on-month in August, the strongest monthly increase this year. According to Piper, the number of users dropped by 2% in July, and the increase in Feed audience in August was enough to offset the decline in Conversation users. According to the broker's analysis of Reddit Ads Manager data, the year-on-year growth rate of total audience in August accelerated to 18% from 12.8% in July.

Meta Platforms (META.US) also rose slightly on Thursday. The previous trading day closed up about 6.5%, but its gains were mainly driven by investors' enthusiasm for its newly launched Muse AI agent. Other social media peers that rely on ads, including Snap (SNAP.US) and Pinterest (PINS.US), which were lower in previous trading days, also rose slightly on Thursday.

According to Piper, the number of international users increased by 29.3% in August, up from 19% in July; the number of US users increased by 5.2%. The brokerage also pointed out that since the beginning of July, weekly user momentum has been strong, mainly driven by international feeds.

Piper warned that adjustments to the Reddit Ads Manager prediction model are expected to reduce the September audience size estimate by about 20%. The brokerage firm said that this one-time reset reflects methodological adjustments and does not indicate a deterioration in basic user trends. These changes affect forecasting, not auctions, optimization, or advertising.

The brokerage also said that in its digital advertising data set, advertising spending in August was 60 basis points higher than expected, with Netflix (NFLX.US), Roku (ROKU.US), YouTube (GOOGL.US), and Pinterest (PINS.US) exceeding expectations the most. However, its spending growth forecast for the third quarter was raised by 30 basis points. Reddit's own third-quarter ad spend growth estimate was also raised by 30 basis points.