Reddit Plunges 25% as Search Traffic Slump and Soft Outlook Overshadow Earnings Beat; Snap Falls 5%, Pinterest Drops 4%, Meta Dips

A strong quarter couldn’t shield Reddit (NYSE:RDDT | RDDT Price Prediction) from a warning that artificial intelligence (AI) is reducing its traffic. Reddit stock is at $97.74 in morning trading, down 25%. The sector fund, Communication Services Select Sector SPDR Fund (NYSEARCA:XLC), is at $99.98, down 1.2%. For a broad-market check, the SPDR S&P 500 ETF Trust (NYSEARCA:SPY) is at $760.15, also down 1.2%, matching the sector fund.

On paper, Reddit’s Q3 2026 results, released October 29 after the close, looked strong. The company’s revenue rose 53% year over year (YoY) to $895 million, beating the $874.9 million analysts had expected. Net income at Reddit climbed 74% to $283 million, and earnings per share (EPS) of $1.40 exceeded the $1.33 analysts forecast. Even so, Reddit set its Q4 2026 revenue guidance at $1 billion to $1.03 billion, below the $1.05 billion analysts expected.

Google’s AI Search Shift Is Draining Reddit’s Traffic

CEO Steve Huffman said on Reddit’s earnings call that search referral traffic fell significantly in Q3 and dropped by more than 1 million per week on average in October. Should that pace continue, Huffman warned, total daily active uniques (DAUq) could fall by a low-double-digit percentage in Q4 from 130.3 million. Reddit’s U.S. DAUq already slipped 2% YoY to 50.7 million.

Huffman faulted AI Overviews and AI Mode at Google, owned by Alphabet (NASDAQ:GOOGL), which answer queries without sending users on to Reddit. “Web search is evolving from a gateway to the web to becoming an AI-powered destination itself,” he stated.

Reddit’s Logged-In Push Trades Reach for Engagement

Reddit’s response is to become more of a direct destination. The company plans to begin fully testing a logged-in-only experience in select markets outside the U.S. in Q4. It is also pushing mobile web users toward its app. Huffman noted that logged-in and app audiences account for more than 80% of Reddit’s monetization.

Logged-in users give Reddit more ad-targeting signals and engage more deeply, though a login wall could turn away casual visitors. “So we will likely be trading reach for engagement,” Huffman acknowledged.

Reddit’s strong results were overshadowed. Jefferies analyst John Colantuoni wrote that revenue growth and 70% growth in earnings before interest, taxes, depreciation and amortization (EBITDA) were overshadowed by worsening U.S. user drops tied to AI Overviews. Colantuoni sees Reddit stock as possibly rangebound in the near term but still likes the long-term story.

What the Peer Group Says About Reddit

Snap (NYSE:SNAP) stock is at $5.37, down 5%. That decline is smaller than Reddit’s but the largest among the three peers.

At the same time, Pinterest (NYSE:PINS) stock is at $19.12, down 4%. Unlike Reddit, Pinterest reported results missing expectations: its Q3 2026 revenue was $1.17 billion, short of the $1.21 billion consensus. Wells Fargo cut its Pinterest price target to $23 from $31 while keeping an Overweight rating, citing weaker Q4 guidance tied to China cross-border headwinds in the EU.

Additionally, Meta Platforms (NASDAQ:META) stock is at $615.42, down 1%. Among Reddit’s peers, that’s the smallest decline.

How Reddit’s Business Differs From Snap, Pinterest and Meta

Reddit is a community discussion platform whose logged-out audience has long leaned on Google search, while Snap depends on direct use of its messaging and camera app, plus Snapchat+ subscriptions and Specs augmented reality glasses. Pinterest is a visual discovery and shopping platform where users search inside the app.

Meta stands at the opposite end, with Facebook, Instagram, WhatsApp and Messenger serving logged-in audiences it owns. That owned-audience model is what Reddit is now racing to build.

What Comes Next for Reddit’s Search-Dependent Model

Reddit stock is now down 57% year to date (YTD), and the selloff fits a wider repricing of how AI reshapes search and advertising. Alphabet’s slide after its own results also pressured AI-related shares on October 29.

Bulls can point to Reddit’s rapid ad revenue growth and Huffman’s view that Google is teaching people to visit Reddit directly. Bears see a user base that could shrink in Q4 and a login wall that might deter casual visitors.

The next test for Reddit is whether U.S. DAUq stabilizes and whether the international logged-in tests lift engagement. Search referral data in the company’s next quarterly update is the other signal to watch for. Investors may want to stay cautious while the debate over Reddit’s logged-in shift plays out.

Contact [email protected] for any questions or corrections.