Reddit Falls 30.44% as AI Search Pressures Referrals

What happened: Reddit closed Friday at $90.15, down 30.44% for the session and 44% for the week, after earnings and guidance raised concerns about growth. Third-quarter revenue increased 53% to $895 million, with $283 million in net income, but daily active users reached 130.3 million against expectations of 134 million; U.S. daily users declined 2% to 50.7 million. CEO Steve Huffman linked referral pressure to Google's AI search features, while reported Google referrals fell by more than 1 million per week in October and fourth-quarter revenue guidance of $1 billion to $1.03 billion missed approximately $1.05 billion consensus.

Why it matters: Reddit's results show why strong current revenue growth may not settle questions about future audience acquisition. Its reported $60 million annual Google data-licensing agreement creates a separate commercial relationship, but the supplied figures do not establish that licensing revenue offsets lost referrals. Testing logged-in-only access outside the United States during the fourth quarter could strengthen direct user relationships, while leaving investors to assess how access restrictions affect discovery and engagement.

Source: Decrypt