Reddit Stock Falls 29% as Google Traffic Warning Hits Q4

Reddit stock (RDDT) fell about 29% on Oct. 30, its worst day since the 2024 IPO, after weaker Google search referrals and a below-estimate Q4 revenue forecast.

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What Happened to Reddit Stock After Third-Quarter Earnings?

Reddit stock sold off sharply because investors focused on user growth and guidance rather than the quarterly beat. Third-quarter revenue reached $895.0 million, up 53% from a year earlier. Net income was $283.3 million, compared with $162.7 million in the same period of 2025. Adjusted EBITDA was $402 million, a 45% margin.

User metrics were softer. Global daily active uniques rose 12% to 130.3 million, a slower pace than in prior quarters. U.S. daily active uniques fell 2% to 50.7 million, while international users grew 24% to 79.6 million. Weekly active uniques increased 16% to 515.2 million.

Two brokerages cut their ratings after the report. Oppenheimer moved to "perform," and KeyBanc lowered its rating to "sector weight" from "overweight."

Why Do Google Search Referrals Matter to Reddit?

Google search referrals matter because a majority of Reddit's audience arrives without logging in, and search is the main source of that traffic. Logged-out users made up 76.8 million of the 130.3 million daily active uniques in the third quarter, about 59% of the total. Logged-in users accounted for 53.5 million.

Reddit has long benefited from its threads ranking prominently in Google results. Alphabet's push toward AI-generated answers inside search reduces the clicks that reach third-party sites. The company warned that this shift could cut daily active users in coming quarters. Reddit said its most engaged and monetizable segments, logged-in users and app users, grew sequentially in the U.S. and the rest of the world.

To reduce reliance on search traffic, Reddit is testing a requirement that visitors log in before viewing content. The change would move the platform away from its open-web model. It could improve ad targeting and measurement, but it also risks reducing the casual discovery that has driven much of its growth.

What Did Reddit Guide for the Fourth Quarter?

Reddit guided fourth-quarter revenue to a range of $1.00 billion to $1.03 billion, which fell short of consensus estimates. It guided adjusted EBITDA to $480 million to $510 million. The midpoint of the revenue range implies sequential growth of about 13% from the third quarter. For a stock that had been priced for sustained growth above 50%, the outlook signaled deceleration.

The reaction was amplified by positioning. Reddit shares had already declined for eight straight sessions before the report, and the stock's momentum indicators were deeply oversold by the time of the Friday session. The earnings event converted a gradual derating into a single-day capitulation.

Strategic Context

The episode highlights a structural tension for platforms whose audience depends on a search engine they do not control. Reddit's advertising business has expanded quickly, with revenue per unique user up 36% to $6.87 in the quarter. User growth, however, now relies more on international markets and on converting anonymous visitors into registered accounts. Both are slower and lower-yielding than organic search traffic in the U.S.

The company also licenses its content for AI model training, which gives it a stake in the same technology that is reshaping search. That arrangement does not offset the loss of referral traffic if AI summaries answer queries without sending users to the original discussion.

What Comes Next for Reddit's User Base?

The next test for Reddit's user base is whether logged-in and app engagement can grow fast enough to offset any decline in logged-out search visits. The fourth-quarter report, due in early 2027, will show whether U.S. daily active uniques stabilize after the 2% decline. It will also show whether the login test is broadened and how it affects traffic and ad pricing.

Market participants will also track changes in Google's AI search features, since any expansion of AI answers would add pressure on referral volumes. Alphabet itself is not directly affected by Reddit's guidance, but the move has revived questions about which publishers and platforms are most exposed to AI-driven changes in search.

Outlook

Reddit entered the quarter with strong revenue momentum, and the third-quarter results confirmed it. The 29% decline reflects a reassessment of the user base that supports that growth, in particular the exposure of logged-out traffic to Google's search changes. Fourth-quarter guidance of $1.00 billion to $1.03 billion sets a lower bar for growth, and the pace of logged-in user gains and the outcome of the login test will shape how the market values the company into 2027.