Soaring costs overshadow Reddit's decent Q4 report and forecast; shares fall. (00:24) Paramount channels CBS, MTV, Nickelodeon, among others going dark on YouTube TV. (02:04) Baidu's AI chatbot Ernie Bot free from April - report. (03:06)Episode transcripts seekingalpha.com/wsb.Show links: Biggest stock movers Thursday: CSCO, RDDT, and moreElon Musk to withdraw $97.4B OpenAI offer if ChatGPT maker stays non-profit - report'Security on our money': U.S. Treasury Secretary in Ukraine to talk rare earths and energyNathan’s Famous, century-old hot dog brand, said to be considering saleSign up for our daily newsletter here and for full access to analyst ratings, stock quant scores, dividend grades, subscribe to Seeking Alpha Premium at seekingalpha.com/subscriptions.
Chapter 1: What are the financial challenges Reddit faces?
Social media company Reddit reported a massive surge in expenses led by its R&D spending, which cast a shadow on its better than expected fourth quarter results and guidance for the current quarter. RDDT shares, which IPO'd in March of last year, are down 13.6% in pre-market action.
Chapter 2: How did Reddit's expenses impact its quarterly results?
Total costs and expenses in Q4 surged 52% to $374.8 million, led by a 69% increase in R&D expenses to $188.6 million. Net income for the three months ended December 31st was $71 million compared to $19 million a year ago. However, the net loss for 2024 increased fivefold to $484.3 million from last year due to IPO-related expenses, according to the company.
On a per-share basis, Reddit earned $0.36 ahead of the average analyst expectation by $0.11 apiece. Revenue rose 71% to $427.7 million and handily beat estimates. In the company's shareholder letter, CEO Steve Huffman said Reddit experienced some volatility in Q4 with Google Search, which was triggered by a periodic algorithm change.
Chapter 3: What is Reddit's revenue and earnings outlook for Q1?
But traffic from search has recovered so far in Q1, and they've regained momentum. For the first quarter, Reddit expects revenue between $360 and $370 million and adjusted EBITDA in the $80 to $90 million range. ahead of the Bloomberg consensus estimate of $358.7 million for revenue and $72.3 million for adjusted EBITDA.
Chapter 4: Why might YouTube TV lose Paramount channels?
YouTube TV subscribers may lose access to Paramount-owned channels including CBS, Nickelodeon, Comedy Central, and MTV, among others, as YouTube and Paramount fail to reach a new agreement. The channels may be removed as early as today. YouTube stated that they are still actively negotiating with Paramount.
Chapter 5: What compensation might YouTube TV offer for lost channels?
They said in a blog post that if they cannot reach an agreement and their content is unavailable for an extended period of time, they'll offer subscribers an $8 credit. A spokesperson for Paramount said in a statement, that they've made a series of fair offers to continue their long-standing relationship with Google's YouTube TV.
The statement goes on to say that YouTube TV is attempting to pressure Paramount to agree to one-sided terms and that the non-market demands may lead to an avoidable loss of Paramount's networks. YouTube and Paramount Global did not immediately reply to Seeking Alpha's request for comment.
Baidu said that its AI chatbot ErnieBot will be available for free to all users starting April 1st, a move to help the Chinese search giant regain momentum in the AI race. Bloomberg reported that the AI service will be accessible on desktop and mobile platforms at no cost.
Baidu is facing increasing competition in China's AI sector, especially from companies like DeepSeek that shook the AI industry just a few weeks ago. Baidu's stock in Hong Kong climbed as much as 7.9% following the announcement. The company also plans to launch the next generation of its AI model, Ernie5, in the second half of this year.
Now for a look at what's trending at this early hour on Seeking Alpha. According to a report, Elon Musk will withdraw a $97.4 billion OpenAI offer if it stays non-profit. Security on our money. The U.S. Treasury Secretary is in Ukraine to talk rare earths and energy. And Nathan's famous century-old hot dog brand is said to be considering a sale.
On our Catalyst Watch for the Day, Ardmore Shipping will hold its Investor Day event. The management team will provide a comprehensive update on product and chemical tanker markets, supply-demand fundamentals, and the impact of geopolitical volatility on trade routes and vessel demand.
Additionally, Ardmore leadership will provide an overview of the company's strategy and capital allocation framework. Cybersecurity firm SailPoint will begin trading after pricing its IPO. And shareholders of Zuora will vote concerning the proposed buyout by Silverlake. Now for a look at the markets ahead of the opening bell. Dow, S&P and Nasdaq futures are in mixed territory.
Crude oil is down 1.5% at $70 a barrel. Bitcoin is up 0.2% at $96,000. In the world markets, the FTSE 100 is down 0.8% and the DAX is up 1.1%. Applovin is on our list of the biggest movers of the day pre-market. App is up 28% after its Q4 results significantly exceeded expectations. On today's economic calendar, at 8.30 a.m., initial jobless claims, also at 8.30 a.m., PPI.
That's it for today's Wall Street Breakfast. Thanks for listening. For a full offering of news, analysis, ratings, and data on stocks and ETFs, become a premium subscriber. Learn more at seekingalpha.com slash subscriptions. I'm your host, Julie Morgan. Go out and make it a great day.
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