Reddit Stock Crashes Over 30% After CEO Warns Google AI Search Is Gutting Platform Traffic

Reddit shares fell more than 30% on October 30, marking what analysts called the company's worst single-day decline ever, after management warned that accelerating losses in search referral traffic could drive a low double-digit percentage drop in daily active users in the fourth quarter from the current base of 130 million. CEO Steve Huffman attributed the shortfall directly to Google's AI-powered search, which now answers questions directly and has cut referral traffic to Reddit by more than one million visits per week. The stock, which traded at $97.51 mid-session after being flagged down more than 24%, extended its loss to over 30% by late afternoon, according to breaking reports.

The selloff came despite Reddit beating third-quarter revenue expectations, underscoring how sharply the market is penalizing the company for its forward guidance. Reddit also proposed requiring users to log in before browsing, a move framed as a defense against AI data scraping, but at least one analyst warned the login wall would create another barrier for casual visitors and could compound the user decline. The company's data licensing arrangements with AI firms, including with Google, add an ironic dimension: AI is simultaneously a revenue source and the primary threat to organic traffic.

At least three brokerages downgraded the stock on the day: Citizens cut its rating to Market Perform from Market Outperform, KeyBanc Capital Markets lowered it to Sector Weight from Overweight, and Oppenheimer moved to Perform from Outperform. The share price has now fallen roughly 70% over the past 14 months from a peak above $260. Seeking Alpha's quant model carried a Hold rating, citing top-tier revenue growth colliding with deteriorating price momentum.