By Kehinde Victor
KEY POINTS
- Reddit plans to move towards a primarily logged-in platform, limiting access to some content for visitors without accounts.
- The company will begin testing different approaches in markets outside the US during the fourth quarter of 2026.
- Third-quarter revenue rose to $895m, beating analysts’ expectations, as advertising continued to drive growth.
- Reddit forecast fourth-quarter revenue of $1bn to $1.03bn, below the average Wall Street estimate of $1.05bn.
- Shares fell as much as 13% after the company announced its results and future outlook.
MAIN STORY
Reddit plans to restrict how much of its platform people can access without an account, as the social media company seeks to increase user engagement and strengthen the advertising business that is driving its revenue growth.
Chief Executive Officer Steve Huffman announced the planned shift on Thursday as Reddit reported third-quarter revenue of $895m, beating analysts’ expectations.
The company intends to begin testing different approaches in markets outside the United States during the fourth quarter. It has not yet decided which parts of the platform will remain accessible to visitors who are not logged in.
The move represents a significant change for Reddit, which has allowed people to browse its discussion forums without creating accounts for about 20 years.
The company is now willing to sacrifice some of that open access in exchange for a smaller but more engaged audience. Its executives believe users who log in regularly will provide more valuable engagement and audience insights for advertisers.
Chief Operating Officer Jen Wong acknowledged that the strategy could reduce the platform’s reach in the short term but said it could support stronger growth over time.
“I think that’s a trade that makes sense for the long term.” – Jen Wong, Chief Operating Officer, Reddit.
THE ISSUES
Reddit wants more value from its users
Reddit’s decision reflects a shift in how the company wants to grow its business. Rather than focusing only on attracting large numbers of visitors, it wants more people to create accounts and participate actively in its communities.
For advertisers, logged-in users can provide more consistent information about interests and engagement, helping the platform understand its audience and improve advertising opportunities.
However, restricting access could discourage casual visitors who currently browse discussions without registering. This creates a trade-off between maintaining the platform’s broad reach and building a more engaged audience.
The company has not disclosed exactly which sections or features will eventually require an account.
Advertising drives revenue growth
Reddit’s advertising business has expanded rapidly since the company went public in early 2024.
Third-quarter revenue reached $895m, exceeding the average analyst estimate compiled by Bloomberg. The growth was largely driven by continued expansion in advertising.
Daily active users increased 12% year-on-year to 130.3 million. However, this was below analysts’ average estimate of 133.5 million.
The figures show that while Reddit is growing its advertising revenue, user growth remains an important part of the company’s performance.
WHAT’S BEING SAID
“I think that’s a trade that makes sense for the long term.” – Jen Wong, Chief Operating Officer, Reddit.
WHAT’S NEXT
Reddit plans to test different logged-in access arrangements in markets outside the US during the fourth quarter of 2026. The results will help inform its decision on which parts of the platform should remain available to visitors without accounts.
The company also issued its first forecast for quarterly revenue above $1bn, projecting fourth-quarter sales of between $1bn and $1.03bn.
However, that outlook fell short of Wall Street’s average estimate of $1.05bn, despite exceeding the $895m recorded in the third quarter.
Investors reacted to the outlook by selling the stock. Reddit shares fell as much as 13% and were down 4.4% before the market closed on Thursday.
The company, which recently joined the S&P 500, is also facing questions about how it will attract and retain users as artificial intelligence changes how people discover and access information online.
BOTTOM LINE
Reddit is trying to build a more valuable advertising audience by making account registration central to the platform experience. The strategy could improve user engagement and advertising opportunities, but it also carries the risk of discouraging visitors who prefer browsing without an account. Its ability to grow revenue while retaining users will remain an important measure of the strategy’s success.
Source: Bloomberg
