Reddit shares slump after weak outlook and traffic warning
Reddit shares fell sharply on Friday, the steepest single-day drop on record, after the company warned that Google's AI-driven search was reducing traffic to its site. The company said its daily active unique visitors could fall by a low double-digit percentage in the fourth quarter if referral traffic keeps weakening. Reddit reported third-quarter earnings per share of $1.40 against $1.35 expected and revenue of $895 million against $878 million expected. Analysts said the company's market value could lose more than $7 billion if current losses continue.
Key facts
- The company said the traffic decline was due to Google's shift to AI mode and AI overviews.
- Reddit plans to require all users to create official accounts to access the platform.
- The login requirement will begin testing in the fourth quarter outside the United States.
- Pinterest shares fell 7.86% to $18.16 after a weaker fourth-quarter revenue forecast.
- Reddit extended its cloud agreements with Amazon Web Services and Google through 2029, worth $880 million and $580 million.
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Why it matters
Reddit's reliance on search referrals exposes its user growth to changes in how Google presents results.
What changed
First published from CNBC, CNA and The Economic Times