Reddit Plunges 30.44% as Google AI Cuts Referrals — SkimNews
Get the Finance newsletter
Daily finance — markets, central banks, M&A, the prints that move money. Free.
- Reddit shares plunged 30.44% to $90.15 on Friday, extending the weekly loss to 44%; its 50-day exponential moving average fell below the 200-day average, creating a bearish death cross.
- Reddit forecast fourth-quarter revenue of $1 billion to $1.03 billion, below the roughly $1.05 billion analysts expected, despite third-quarter revenue rising 53% year over year to $895 million.
- Reddit reported third-quarter advertising revenue of $847 million, up 54% year over year, plus $283 million in net income and diluted EPS of $1.40, up 75% and above the $1.33 consensus.
- Reddit reported 130.3 million daily active unique visitors, up 12% year over year but below the roughly 134 million expected; U.S. daily users fell 2% to 50.7 million.
- Steve Huffman said Google search referrals fell by more than 1 million per week on average in October and warned daily users could decline by a low double-digit percentage in Q4 if that pace continued; asked about AI Mode, he said it 'does not drive traffic' for Reddit.
- Reddit plans to test a primarily logged-in experience in selected markets outside the U.S. during Q4, requiring an account before most platform access.
- Google signed a reported $60 million-a-year data-licensing deal with Reddit in February 2024; a few months later, Reddit announced a similar OpenAI partnership that also gave Reddit access to OpenAI’s technology.
Why it matters: Google gains licensed access to Reddit’s human conversations while Reddit loses Google-referred visitors: referrals fell more than 1 million per week in October, U.S. daily users dropped 2%, and the Q4 revenue outlook was $1 billion–$1.03 billion. Reddit’s $60 million-a-year data deal and traffic problem are two sides of the same AI shift.
Ask SkimNews
