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Reddit Shares Plunge 30% After Company Says Its Q3 Search Traffic Was "Down Meaningfully"
Deadline • • business
Key Points:
- Reddit's stock dropped 30% following a report of a significant decline in search traffic during the third quarter, contributing to a 60% year-to-date decrease in 2026 despite the company going public earlier this year.
- The company reported strong Q3 financial results with revenue increasing 53% to $895 million and earnings per share rising to $1.40, surpassing Wall Street expectations.
- Investors reacted negatively to Reddit’s softer Q4 revenue forecast of $1 billion to $1.03 billion, below the $1.05 billion consensus, and a projected decline in daily users by a low double-digit percentage from 130 million.
- Reddit highlighted a meaningful drop in search referral traffic, especially from logged-out and web users, which also affected logged-in and app traffic, reflecting broader disruptions in digital search dynamics influenced by AI.
- In its shareholder letter, Reddit emphasized its unique community-focused model as distinct from AI-powered search and social media platforms, asserting that AI search lacks the context, nuance, and sense of belonging that Reddit provides.
