The Reddit stock crash today sent the company’s shares tumbling after third-quarter results, with the sell-off cutting the stock by more than 15% right after the numbers and deepening to roughly 25% to 30%. CEO Steve Huffman blamed Google’s AI-powered search tools for a steep decline in organic referral traffic, even though Reddit beat quarterly earnings and revenue forecasts.
Investors focused less on the beat and more on soft fourth-quarter sales guidance and Huffman’s warning that search referrals from Google are eroding. In a shareholder letter, Reddit said those referrals had been dropping by more than 1 million visits per week through October.
Why the shares sold off
Reddit reported third-quarter revenue of $895 million against expectations of about $878 million, and earnings per share of $1.40 against about $1.35. Sales still rose 53% from a year earlier. Average revenue per user came in at $6.87, above the $6.50 analysts had projected.
Daily active unique users rose 12% year-over-year to 130.3 million, below the 133.7 million Wall Street had modelled. In the United States, that measure fell 2% to 50.7 million, short of a 53.5 million estimate. Reddit guided fourth-quarter sales to a range of $1 billion to $1.03 billion, under the $1.05 billion consensus. Huffman still called the outlook “a strong guide,” saying the company was growing at an industry-leading rate despite search headwinds.
Google AI and the traffic squeeze
Huffman told analysts and media that Google’s AI Overviews and AI search modes answer questions on the results page instead of sending people onward. “AI Mode does not drive traffic. Not for us, and not to anybody as far as I know. That’s just a fundamental shift in how Google works,” he said.
He said search referral traffic was “down meaningfully” in the third quarter and that the trend would continue in the fourth. Earlier Google updates that favoured forum-style content had helped Reddit grow, he noted, but the AI push was different—a lasting change from Google as a traffic driver. The Reddit stock crash today has therefore been read as a wider signal for media and discussion sites that rely on search discovery.
Login tests and what comes next
Reddit said it will begin testing a requirement that users create accounts to use the platform, starting in the fourth quarter outside the United States. Timing for a full rollout was not fixed; Huffman said the change is complex and that the company is still deciding what logged-out visitors can see.
Most of Reddit’s sales come from online advertising, and the company earns more from app and logged-in users than from casual browsers. Huffman said both of those groups were up quarter over quarter and that marketing would continue to offset weaker search referrals. Reddit’s other revenue, including data licensing, rose 35% to $48 million; its largest partners in that business include OpenAI and Google. Huffman said Reddit remains in talks with Google on licensing and will only renew on terms that make sense for the company.
Timeline: what has happened so far
- Through October: Reddit said Google search referrals were falling by more than 1 million visits a week.
- Third quarter: Revenue hit $895 million and EPS $1.40; daily active uniques reached 130.3 million globally.
- After Thursday’s earnings release: Shares dropped more than 15%, with the plunge extending toward about 25% to 30%.
- Fourth quarter (planned): Login-requirement tests outside the US; sales guided at $1 billion to $1.03 billion; referral weakness expected to continue.
Aasan alfaaz mein
Reddit ke shares tez giray hain—zyada se zyada lagbhag 25 se 30 percent tak. Company ke CEO ne Google ki AI search ko traffic ghatne ki wajah bataya. Ab Reddit kuch mulkon mein login lazmi karne ka test karega. Pakistan mein jo log Reddit sirf dekhte hain, unhein baad mein account banana pad sakta hai.
