Plunging Search Traffic is Hammering Reddit's Stock

Dow Jones10-30 22:43

Reddit's stock tumbled more than 25% Friday morning, following a dire warning about search traffic and user volume in the months ahead. Shares are on track for their biggest one-day decline since Reddit's 2024 IPO.

Third-quarter revenue increased by more than 50%, but Reddit missed analysts' expectations for user growth. What happened since the quarter closed is even more worrisome: Reddit said search traffic dropped by more than 1 million referrals per week in October, and daily average users from search could fall by more than 10% in the fourth quarter.

Reddit had soared on Google traffic and was a beneficiary of early AI chatbot searches as a common source from which AI models pulled information, but Google's shift to more comprehensive AI-generated answers means users aren't bothering to click through to Reddit, or other publications, as much.

Reddit CEO Steve Huffman said the company's conversations with OpenAI and Google "continue to progress" but it may not renew its existing licensing deals with the platforms.

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