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.
Full Episode
Welcome to Seeking Alpha's Wall Street Breakfast, where we cover the top news for investors every morning. Good morning. Today is Thursday, February 13th. I'm Julie Morgan. Reddit is experiencing rising costs. Your YouTube TV experience may be changing. And Baidu is putting a new price tag on Ernie.
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.
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.
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.
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.
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.
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