Reddit Stock Drops 18% as Google AI Mode Cuts Search Traffic

Reddit stock fell about 18% in extended trading on Thursday after the company beat Wall Street's third quarter forecasts but warned that Google is sending it far fewer visitors. The slide pushed the shares below their 52 week low and made "rddt stock" one of the fastest rising technology searches in the US on Friday, according to Google Trends.

The quarter itself was strong. The problem was everything Reddit said about the next one.

Revenue of $895 million beat estimates by a wide margin

Reddit reported third quarter revenue of $895 million, up 53% from a year earlier and above the average analyst estimate of $878.4 million compiled by LSEG, according to Reuters. Growth did slow compared with the prior quarter.

The other headline numbers, as given on the company's earnings call:

• Advertising revenue: $847 million, up 54%
• Other revenue (mostly data licensing): $48 million, up 35%
• Net income: $283 million
• Diluted earnings per share: $1.40, against expectations of $1.33
• Free cash flow: $363 million, up 98%

Chief financial officer Drew Vollero said Reddit has now passed $3 billion in revenue over the trailing 12 months, and that the next internal target is $5 billion.

Before the report, the stock closed the regular session at $129.60. After hours it dropped to around $106.50.

Google search referrals dropped by over 1 million a week in October

The selloff started with one sentence from chief executive Steve Huffman. Search referral traffic, he said, was down meaningfully in the third quarter, and the decline sped up late in the period. In October alone, Reddit saw Google referrals fall by more than 1 million on average per week.

Huffman put the blame on Google's AI search features. On the call he said that AI Mode "does not drive traffic, not for us and not to anybody," Reuters reported. He also argued that demand for the site has not gone away. "People still want Reddit," he said. "It is just Google is not sending them to Reddit the way they used to."

That shift is now visible in the user count. Daily active uniques in the US fell 2% to 50.7 million, the first decline since Reddit went public in 2024. Worldwide, Reddit has roughly 130 million daily active uniques, and Huffman warned the total could fall by a low double digit percentage in the fourth quarter.

Reddit is not the only big platform wrestling with how Google's AI answers change the flow of clicks. Google has been folding more of its own data into search and ads, as we covered in our look at Google's Personal Intelligence feature.

Profit guidance came in below what analysts wanted

For the fourth quarter, Reddit forecast revenue of $1.00 billion to $1.03 billion, which Reuters described as largely in line with estimates. The softer part was profit. Reddit guided to adjusted EBITDA of $480 million to $510 million, while analysts were looking for $512.2 million, so even the top of the range fell short.

Put together with the traffic warning, investors read the outlook as the first sign that Google's changes could slow a business that has grown fast since its IPO. Reddit was one of several tech names punished this week for cautious guidance. Intel's stock slid on its own fourth quarter outlook, and Fortinet dropped 25% despite a solid quarter.

A logged in only Reddit, starting outside the US

Reddit's answer is to lean on people who sign in. The company plans to test a logged in only experience in select markets outside the US during the fourth quarter, before deciding on a wider rollout. Huffman said the product works best when it is personalized for logged in users.

The money supports that bet. Reddit executive Jen Wong said more than 80% of Reddit's monetization comes from logged in users in the app. She also said ad click volume grew more than 50% and conversion volume more than tripled from a year earlier.

Not everyone is convinced. "Requiring users to log in creates another barrier to engagement, particularly for casual users," Luke Stillman, managing director at Madison and Wall, told Reuters. Casual visitors arriving from search are exactly the group Reddit is losing, and a login wall could make it harder to win them back.

Other social platforms have also been tightening how outside links and traffic work, such as Facebook's limit on links for some pages. Reddit's move goes further, since it changes who can read the site at all.

Data licensing deals now come with guardrails

The traffic loss also changes Reddit's position with AI companies. Google still crawls the site heavily, Huffman said, even as it sends fewer visitors back. In a statement, he said, "We will continue licensing our corpus intentionally," adding that those commercial deals come with guardrails.

That puts the $48 million "other revenue" line in a new light. If search traffic keeps falling, licensing Reddit's archive of posts to AI developers on stricter terms may become a bigger part of the story than it is today.

The first real test comes with the fourth quarter report, when Reddit will show whether daily users fell as much as Huffman warned and how the login experiment went. For more on the companies shaping the web, see our tech news section.