Breakfast News: Reddit's User Growth Slows

Reddit (RDDT 5.03%) fell by over 18% after the closing bell, despite reporting a 71.3% increase in revenue versus last year. The drop can be partly attributed to lower user growth following an algorithm change from Alphabet (GOOG +0.41%).

The Trade Desk (TTD 2.15%) dropped by over 26% after hours as the business missed its revenue target for the first time as a public company. As long-term investors, it's key to look beyond knee-jerk reactions and spend time establishing if your investing thesis remains intact.

• "We stumbled into a series of small execution missteps": CEO Jeff Green knew the implications of the results, outlining a 15-point action item list on the earnings call to address things. This included increasing brand-direct efforts as well as more AI investment.
• Every cloud has a silver lining: Although revenue missed expectations, the quarterly figure was still up 22% versus the same period last year. It has an agreement to buy Sincera, a digital advertising data company, which could help to fuel further growth this year.

Rule Breakers rec Airbnb (ABNB +0.68%) will report Q4 earnings after the market closes. Investors should watch for more information about key expansion markets as well as the impact of removing 300,000 low quality listings.

• Ranked 8th for its ability to beat the market over the next 5 years across all Motley Fool recs: Airbnb management recently announced there would be two major new initiatives this year that could each generate $1 billion or more in revenue. The report today should provide more detail on what this entails.
• Revenue expected to jump over 20%: Beating the S&P 500 by 19% since its Stock Advisor recommendation, Datadog (DDOG +6.06%) also reports today, with eyes on any increased demand for AI-supported security products as well as how strong retention rates are for existing clients.

Federal Reserve Chair Jerome Powell said there was more work to be done on taming inflation after headline Consumer Price Inflation (CPI) came in hotter than expected, causing an initial drop in stocks across the board.

• "We want to keep policy restrictive for now": Traders are now only pricing in just over one 25bps interest rate cut for 2025, with Powell strongly hinting that the base rate will remain elevated for the foreseeable future.
• Headline inflation back at June 2024 levels: Signs of a trend higher could also be noted in the core reading (excluding food and energy), as it rose to 3.3%, above the 3.1% consensus and higher than the 3.2% from last month. This was a 0.4% monthly increase, the largest since last March.