Reddit shares drop about 30% after it warns Google's AI search is cutting its traffic

Reddit's shares fell about 30% on Friday 30 October 2026, their biggest one-day drop and their lowest level in over a year, after the company warned that Google's AI search is cutting the traffic it sends Reddit. Decrypt put the closing fall at 30.44%, to $90.15, while Reuters, via The Star, cited 29% during the session. Pinterest dropped nearly 8% the same day after missing third-quarter revenue and profit estimates.

“When more than a million search referrals a week disappear because Google's AI answers the question itself, investors are no longer looking just at the next three or four months, but at how much of Reddit's audience it will really own in the years ahead,”

Vitor Madeira, senior market specialist at Capital.com, in Reuters coverage · thestar.com.my ↗

The quarter itself was strong: revenue up 53% to $895m, net income of $283m and earnings per share of $1.40 against $1.33 expected. The worry was users and the outlook. Daily active uniques reached 130.3m, up 12% but short of the roughly 134m analysts wanted, with the US down 2% to 50.7m. Fourth-quarter revenue guidance of $1bn to $1.03bn sat below the roughly $1.05bn expected.

Reddit said Google search referrals fell by more than a million a week on average in October, with the decline speeding up late in the third quarter. It warned that daily users could fall by a low double-digit percentage in the fourth quarter if that continues. Chief executive Steve Huffman explained that Google's AI Overviews and AI Mode keep answers on Google's own page, so they send no traffic to Reddit or, as far as he knows, to anyone else. The pressure also reaches news publishers, Chegg and travel and review sites, which depend on search visitors in the same way. Before the drop, Reuters notes, Reddit was already down about 44% for the year and Pinterest about 23%.

Investors reacted hard, and the valuation gap shows it: Reddit's forward price-to-earnings ratio of about 19, per LSEG, compares with about 7.5 for Snap and 8.5 for Pinterest. Reuters said Reddit could lose over $7bn in market value and Pinterest about $900m, and at least 11 brokerages cut their price targets on Reddit and 13 did so on Pinterest. Reddit also said it extended its Google cloud services agreement through 2029, with $580m committed over three years. Alphabet itself shed about $500bn of value on 29 October after its search revenue growth slowed to 12%.

For the fourth quarter Reddit plans to test a mostly logged-in experience in selected markets outside the US, after tightening access to its public data, which annoyed some long-term users. Investors will be watching the referral trend and the fourth-quarter guidance.