Reddit Shares Plunge 30% on Q3 Search Traffic Decline

Reddit’s stock plunged 30% on Friday after the company reported that its third-quarter search traffic was “down meaningfully,” intensifying investor concerns about AI-driven disruption in digital search. Despite beating Wall Street forecasts with Q3 revenue surging 53% year-over-year to $895 million and earnings per share rising to $1.40, the company issued a softer-than-expected Q4 outlook. Daily active users fell 2% in the quarter, with a potential low-double-digit percentage decline projected for Q4 from 130 million, and revenue guidance of $1.0–$1.03 billion missed analysts’ $1.05 billion consensus. The decline follows Alphabet’s $500 billion market value loss a day earlier, reflecting broader upheaval as AI-powered search reshapes the digital economy. Reddit attributed the traffic drop to logged-out and web users, while arguing in a shareholder letter that AI search cannot replicate its community-driven experience.