Reddit stock plunges 25% as Google search changes hit user growth

Reddit shares fell more than 25% at Friday's market open after the company warned user growth could weaken further in the fourth quarter due to declining traffic from Google searches, overshadowing better-than-expected third-quarter results. CEO Steve Huffman said daily unique active visitors could drop by a low double-digit percentage in the current quarter from roughly 130 million if referral traffic continues to decline. The company also forecast fourth-quarter revenue of $1 billion to $1.03 billion, below Bloomberg's consensus estimate of $1.05 billion, raising doubts about its advertising business amid changes in online search. Several analysts reassessed the stock, which has fallen 46% this year. BofA Securities and Citizens downgraded their recommendations, while Guggenheim and Needham maintained buy ratings but sharply cut price targets. Reddit attributed the traffic decline to Google's AI-powered search features, which can answer questions directly, reducing the need for users to click through to websites.