Reddit shares plunge 29% as Google’s AI search drains its traffic
Reddit’s shares plunged 29.2% on Friday, 30 October, closing at $91.73, down from $129.60 the previous session. The company warned Google’s growing use of artificial intelligence (AI) in search was cutting visitors to its forums — and that its audience could shrink further. Reuters reported the Nasdaq’s biggest daily decline since June, and chipmaker Intel fell 29% too.
The warning overshadowed a strong quarter. Third-quarter revenue rose 53% to $895 million, and earnings of $1.40 per share beat the $1.33 analysts expected. But investors focused on users. Worldwide, Reddit averaged 130.3 million daily active users, up 12% on a year earlier — yet in the United States, daily users fell to 50.7 million, down 2.5 million on the previous quarter.
The problem is how people reach Reddit. Much of its audience arrives through Google searches, and CEO Steve Huffman told investors search referrals fell by more than one million visits a week on average in October. Google’s AI Overviews and AI Mode answer questions on the results page, so fewer people click through. “The reality is the AI Mode does not drive traffic, not for us and not to anybody as far as I know,” Huffman said. Reddit warned that if the trend continues, daily users could fall by a low double-digit percentage in the fourth quarter.
Why it matters
There is an irony here. In 2024, Reddit signed deals letting Google and OpenAI train their AI models on its content, reportedly worth $60 million and $70 million a year respectively. That income supports revenue, but the traffic AI search takes away may now cost more. JPMorgan cut its Reddit price target to $150 from $185, and Goldman Sachs cut its to $140 from $215. It is one of the clearest early cases of AI disrupting a business that helped to build it — and a warning to any publisher that depends on search clicks. Its shares had already fallen about 44% this year before Friday, according to Reuters.
What happens next
The test comes with fourth-quarter results early next year: whether daily users fall as warned, and whether revenue reaches the low end of its $1 billion to $1.03 billion guidance, below the $1.045 billion analysts expected. Reddit is also testing sign-in for most content, hoping to turn casual visitors into logged-in users, who bring in about 80% of its ad money.
This article is for general information and education only. It is not legal or financial advice.
Sources
- https://www.freedom969.com/business/reddit-plunges-as-google-ai-search-squeezes-traffic (Reuters via Freedom 96.9, 30 October 2026)
- https://985theriver.com/2026/10/30/october-ends-with-a-thud-for-intel-reddit-ai-stalwarts-2/ (Reuters via 98.5 The River, 30 October 2026)
- https://www.europesays.com/ie/760443/ (TheStreet via EuropeSays, 31 October 2026)
