Reddit Shares Fall About 29% as Search Referrals Slump

Reddit shares fell about 29% Friday after the company disclosed a sharp drop in search traffic and warned that daily users could decline this quarter if referrals keep falling.

Reddit’s shareholder letter said search referrals declined meaningfully in the third quarter, with the drop accelerating later in the quarter. In October, search traffic fell by more than 1 million referrals per week on average.

Reddit CEO Steve Huffman said on the Oct. 29 earnings call that Google’s AI Mode “does not drive traffic, not for us and not to anybody as far as I know.” Reddit did not quantify how much of the overall referral decline came from Google’s AI features.

Reddit said sustained referral losses could reduce fourth-quarter daily active uniques by a low-double-digit percentage from a base of about 130 million. That is a conditional estimate, not a reported user loss.

Third-quarter revenue rose 53% year over year to $895 million, while advertising revenue increased 54% to $847 million. Global daily active uniques averaged 130.3 million, up 12%; the U.S. figure was 50.7 million, down 2%.

Reddit plans to test a primarily logged-in experience in selected markets outside the U.S. during the fourth quarter. TokenPost covered the referral decline and Huffman’s comments a day earlier.