Reddit (RDDT) Shares Plunge After It Warns Google Search Traffic Is Falling

What happened

Shares of online discussion platform Reddit (RDDT) plunged 30.6% on Friday, to $89.94 as of 2:51 p.m. ET, after the company forecast fourth-quarter revenue below Wall Street’s estimates and warned that falling search traffic from Google could shrink its user base. Reddit reported its third-quarter results after the close on Thursday.

Reddit expects fourth-quarter revenue of $1.00 billion to $1.03 billion, short of the $1.05 billion analysts expected, according to LSEG data cited by CNBC. Benzinga reported a similar consensus of $1.046 billion.

The forecast overshadowed a strong quarter. Third-quarter revenue rose 53% year on year to $895 million, ahead of the $878 million LSEG consensus cited by CNBC, Benzinga and Investing.com reported.

Why it matters

The problem is users, not advertising. Daily active uniques, Reddit’s count of logged-in and logged-out daily visitors, rose 12% year on year to 130.3 million, below the roughly 133.7 million analysts expected, CNBC and Decrypt reported. In the US, daily users fell 2% to 50.7 million.

Chief Executive Steve Huffman said search referrals fell by more than 1 million a week on average in October, and that daily users could drop by a low-double-digit percentage in the fourth quarter if the trend continues, according to Benzinga and CNBC. He linked part of the decline to AI-generated summaries in search results. Reddit also said it will test requiring users to log in to see content, CNBC reported.

For years the bull case rested on Google sending a steady stream of new visitors to Reddit’s threads. A warning that the stream is shrinking goes to the heart of that story.

What the market is telling us

Reddit’s shares moved 5% or more on 59 of the last 252 sessions. Before Friday, the stock was already down 43.6% this year, and at Thursday’s close of $129.60 it sat 50.0% below its 52-week closing high of $258.93 from 13 January 2026. Friday’s fall took it below its previous 52-week closing low of $121.84.

Revenue growth of 53% would usually be rewarded, but advertisers pay for audience, and a forecast that the audience may shrink is a fair reason for the market to cut the price it pays for that growth. We’d want to see daily users stabilize before reading the drop as an overreaction.

Reddit was one of the biggest movers after hours on Thursday, as we reported in our round-up.