Reddit Stock Plunges 29% in Worst Day Since IPO as Google AI Search Cuts Traffic

Reddit stock fell 29.22% on Friday, Oct. 30, the worst day for the shares since the company went public in 2024. The drop came after Reddit gave a weaker-than-expected sales forecast and warned that Google’s AI-powered search answers are sending it fewer visitors.

The selloff beat the stock’s previous record one-day drop of 20.99% on July 31, CNBC reported. Reuters said that if the losses held, Reddit was on track to lose more than $7 billion in market value in a single session.

Why Reddit stock fell: the forecast and the traffic warning

Reddit’s third-quarter results, released Thursday, Oct. 29, beat Wall Street’s expectations. The trouble was the outlook. The company forecast fourth-quarter revenue of $1 billion to $1.03 billion, below the analyst consensus of $1.05 billion cited by CNBC, and adjusted EBITDA of $480 million to $510 million.

The bigger worry was traffic. Reddit warned that its daily active unique visitors could fall by a low double-digit percentage in the fourth quarter if search referrals kept declining, Reuters reported. Google still shows Reddit pages in search results, but more people are getting answers directly from Google’s AI tools and not clicking through. “When more than a million search referrals a week disappear because Google’s AI answers the question itself, investors are no longer looking just at the next three or four months, but at how much of Reddit’s audience it will really own in the years ahead,” Vitor Madeira, a senior market specialist at Capital.com, told Reuters.

CEO Steve Huffman told CNBC that search referral traffic from Google went “down meaningfully in this quarter” because of AI. Reddit also said it will test requiring visitors to log in to see content, a major change for a site known for open access. “Reddit is the last platform to provide basically unfettered logged-out access, and that’s largely because of me. I’ve been holding that line,” Huffman told CNBC. “I think users will probably go through the same understanding that I have, which is that it’s a sign of the times.”

By the numbers: strong growth, but fewer U.S. users

On paper, the quarter was strong. Revenue rose 53% from a year earlier to $895 million, with advertising up 54% to $847 million. Net income reached $283 million, up from $163 million, for a net margin of about 32%. Diluted earnings were $1.40 per share, up 75%, and free cash flow rose 98% to $363 million. Huffman said in the earnings release that revenue over the last 12 months had passed $3 billion. The company ended September with $3.03 billion in cash and marketable securities and was added to the S&P 500 index during the quarter.

The user numbers tell a different story. Global daily active uniques rose 12% to 130.3 million and weekly active uniques rose 16% to 515.2 million. But U.S. daily users fell 2% to 50.7 million from 51.6 million a year earlier. All of the growth came from overseas, where daily users jumped 24% to 79.6 million.

By The Boston Report’s math, international users now make up 61% of Reddit’s daily audience. The weakest group was logged-out U.S. visitors, the people most likely to arrive from a Google search. That group fell 4.2%, from 28.5 million to 27.3 million, while logged-in U.S. users edged up to 23.4 million from 23.1 million. That gap explains why Reddit wants more people to sign in: logged-in users are more active on the platform, which helps the ad business, Huffman told CNBC.

Wall Street reaction and the Google connection

At least 11 brokerages cut their price targets on Reddit after the report, according to Reuters. Citizens wrote that “search changes highlight the problem with selling content to Google,” CNBC reported, and that the login test “puts more pressure on user monetization.” Before Friday, the stock had already fallen about 44% this year, Reuters said.

Reddit remains tied to Google in other ways. On Friday it said it had extended its cloud services agreement with Google through 2029, committing to spend $580 million over three years. Google faces its own questions: Alphabet shares fell sharply Thursday after its search revenue growth slowed to 12% in the September quarter, Reuters reported.

Other sites that depend on search traffic, including news publishers, education platforms such as Chegg and travel and review sites, face the same pressure, Reuters noted. Rival Pinterest fell nearly 8% Friday after missing revenue and profit estimates.

For more on the week in markets, see our Oct. 30 Business Report, and for the fight over how AI companies use web content, read about the new shared AI training opt-out backed by Google, OpenAI and Microsoft.

Sources

• CNBC: Reddit stock plunges 29% after weak outlook, wrapping its worst day ever (Oct. 30, 2026)
• Reuters via Investing.com: Reddit shares plunge as Google’s AI search squeezes traffic
• Reddit Investor Relations: Reddit Reports Third Quarter 2026 Results (Oct. 29, 2026)