Reddit User Growth Slows for Third Straight Month as Digital Ad Market Rebounds

Reddit’s user base declined for the third consecutive month in May, according to Piper Sandler. The platform lost 6 million users month-over-month, driven mainly by a 7 million drop in feed ad units. Conversation units, however, remained stable. The data highlights a broader slowdown that began in March, with U.S. audience growth slowing to 9% year-over-year in May—down from 16% in March. International growth also decelerated sharply to 31%, compared to 51% two months prior.

Despite Reddit’s struggles, Piper Sandler noted positive momentum in the broader digital advertising market. Digital ad spend is projected to grow 6.3% year-over-year in Q2 2025—up around 80 basis points from last month’s forecast and accelerating from Q1 figures.

Pinterest (NYSE:PINS) showed encouraging signs, especially with its upgraded Performance+ ad product. Piper Sandler’s testing revealed that Performance+ campaigns in May had outbound cost-per-clicks roughly 17% lower than standard campaigns. This marks a significant shift from November, when Performance+ costs were 25% higher, suggesting improved efficiency and pricing.

Meta Platforms (NASDAQ:META) is also seeing gains in advertising performance. Piper Sandler reported lower cost-per-clicks and cost-per-engagements, which supports higher CPMs across Meta’s platforms. Meanwhile, U.S. ad units for Temu on Meta remain minimal, a situation that appears already priced into market expectations.

As the digital ad market recovers, platforms like Pinterest and Meta are capitalizing on optimized ad performance. However, Reddit’s ongoing user declines may raise concerns about its long-term engagement strategy, particularly in competitive social media and advertising landscapes.