The platform expects fourth-quarter revenue to fall short of analyst consensus, projecting between $1 billion and $1.03 billion amid persistent traffic headwinds. Leadership warned that daily active unique visitors could decrease by a low double-digit percentage if external click-through rates do not improve. Despite these forward-looking concerns, the company delivered a 53% surge in third-quarter revenue to $895 million alongside positive net income. Meanwhile, Reddit continues substantial infrastructure spending, committing $580 million to Google and $880 million to Amazon Web Services through 2029.
Key points
Google's shift to AI-powered direct search summaries poses an immediate operational threa…: Google's shift to AI-powered direct search summaries poses an immediate operational threat to third-party web referral traffic.
Platform user numbers suffered domestically, with United States daily active users fallin…: Platform user numbers suffered domestically, with United States daily active users falling 2% year over year to 50.7 million.
Long-term infrastructure commitments remain substantial, including a combined $1.46 billi…: Long-term infrastructure commitments remain substantial, including a combined $1.46 billion allocated across Amazon and Google cloud services through 2029.
Sources checked by our analysis pipeline: 1
Shares of Reddit plunged 29% in Friday’s trade on October 30, falling to $91.30 apiece, after the social networking platform warned that user growth could weaken further in the fourth quarter as declining traffic from Google Search weighs on its audience.
The warning overshadowed the company’s stronger-than-expected third-quarter results. If stock close at the same level, the decline could mark Reddit’s worst single day fall since its stock market debut in March 2024.
The company forecast fourth-quarter revenue of $1 billion to $1.03 billion, below the Bloomberg consensus estimate of $1.05 billion. The outlook raised concerns about whether its advertising business can maintain its growth momentum amid changes in online search.
Chief Executive Steve Huffman said daily active unique visitors could decline by a low double-digit percentage in the current quarter from approximately 130 million if referral traffic continues to weaken.
Reddit has increasingly blamed changes to Google’s search experience for reducing the number of users directed to its platform.
The company’s warning highlights how Google’s shift towards AI-powered search, which can answer queries directly, is disrupting the flow of…
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