Reddit shares plunged nearly 29% in intraday trading on October 30 after CEO Steve Huffman warned that Google’s AI search changes were reducing referral traffic. RDDT traded at $92.24, down 28.83%, at 12:04 p.m. Eastern, according to market data.
On the October 29 earnings call, Huffman said search referrals had fallen by more than 1 million on average each week during October. If that pace continues, he warned, fourth-quarter daily active uniques could decline by a low-double-digit percentage from a base of about 130 million.
Huffman attributed the weakness in part to AI Mode and AI Overviews, arguing that Google increasingly answers questions without sending people to other websites. “AI Mode does not drive traffic,” he said. He maintained that demand for Reddit itself remained strong, pointing to its popularity as a search term.
The warning overshadowed strong financial growth. Reddit’s results showed revenue up 53% to $895 million, net income of $283 million and diluted earnings of $1.40 a share. The company also highlighted its S&P 500 membership, following the index inclusion we covered in August.
Reddit is prioritizing direct relationships with users and plans to test a primarily logged-in experience in selected markets outside the U.S. this quarter. Huffman said logged-in and app users account for more than 80% of monetization. Whether those audiences keep growing as search referrals weaken remains the key operating question.
