Reddit Plunges 18% as Google AI Cuts Its Search Traffic

Reddit stock plunged about 18% in after-hours trading on Thursday, October 29, 2026, even though the company beat third-quarter estimates — because Google AI search changes are cutting the traffic Reddit depends on, and fourth-quarter guidance fell short. Shares fell to about $106 after hours, after closing down 3.8% at $129.60 in regular trading.

What happened in Reddit's Q3 earnings?

Reddit reported third-quarter revenue of $895 million, up 53% from a year earlier, ahead of the roughly $878 million analysts expected on LSEG estimates. Earnings were $1.40 per share, ahead of expectations around $1.33 to $1.35, and net income reached $283 million, up about 74% year over year. Advertising revenue rose 54% to $847 million, while other revenue — which includes AI data licensing — rose 35% to $48 million.

Average revenue per user reached $6.87, ahead of the $6.50 expected, and U.S. average revenue per daily user rose to $13.82. Reddit is making more money from each person who shows up.

Why is Reddit stock falling if earnings beat?

The problem is the outlook, not the past quarter. For the fourth quarter, Reddit guided revenue to $1 billion to $1.03 billion, below the $1.05 billion Wall Street expected. Its adjusted EBITDA guidance of $480 million to $510 million also bracketed estimates on the low side. In an earnings season where investors have punished soft guidance at Amazon, Intel, Roblox and other names the same evening, that miss alone was enough to pressure the stock.

The bigger concern was users. Daily active uniques reached 130.3 million, up 12% year over year but short of the 133.7 million expected. U.S. daily users fell 2% to 50.7 million, and the decline was concentrated in logged-out visitors — the people who typically arrive from a Google search rather than opening the app.

How is Google AI hurting Reddit's traffic?

Chief Executive Steve Huffman said search referral traffic was down meaningfully in the third quarter, with the decline accelerating late in the quarter and continuing into October. Reddit said search referrals dropped by more than 1 million per week on average during October. Huffman attributed the fall to Google's shift to AI Mode and AI Overviews, which answer questions directly on the search page instead of sending readers onward to discussion threads.

If an AI overview summarises human answers without a click, Reddit loses the visit, the ad impression and the chance to convert a reader into a regular user. Reddit warned that if October's pace continues, daily active uniques could fall by a low-double-digit percentage in the fourth quarter.

Why is Reddit testing a login requirement?

Reddit said it will begin testing a login requirement in select markets outside the United States in the fourth quarter, moving toward a primarily logged-in experience. Huffman said a logged-in audience would improve ad targeting, protect Reddit's data corpus and support higher engagement. The company has not given a timeline for a wider rollout and is still deciding what logged-out visitors will be able to see.

Logged-in users are worth more to advertisers, but forcing an account could reduce casual discovery — the funnel that built Reddit's audience. Reddit also said it remains in negotiations with Google over its agreement.

What happens next for Reddit?

Investors will watch three things: whether the fourth-quarter user decline matches the low-double-digit warning, whether revenue still reaches the $1 billion to $1.03 billion range despite weaker traffic, and what the login test does to engagement outside the U.S. Reddit has shown it can earn more from fewer U.S. users — U.S. revenue rose about 50% even as U.S. daily users fell — but pricing cannot carry growth forever if the audience keeps shrinking.

This report describes what happened and why markets reacted. It is not financial advice, and no reader should buy, sell or hold a security based on this article alone.

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FAQ

Why did Reddit stock fall 18% after earnings?

Reddit beat Q3 estimates, but guided Q4 revenue to $1 billion–$1.03 billion, below the $1.05 billion expected, and warned search traffic losses could cut daily users by a low-double-digit percentage.

How much did Reddit earn in Q3 2026?

Reddit reported revenue of $895 million, up 53% year over year, earnings of $1.40 per share, and net income of $283 million.

Why is Google AI a problem for Reddit?

Google's AI Mode and AI Overviews answer questions on the search page, reducing clicks to Reddit. Reddit said search referrals fell by more than 1 million per week on average in October.

What is Reddit's login requirement test?

Reddit will test requiring an account in select markets outside the U.S. in Q4 2026, moving toward a primarily logged-in experience to improve ad targeting and protect its data.