TLDR
- Reddit (RDDT) stock fell 29% to $91.73 on Friday after Q3 results showed U.S. users shrinking.
- Q3 revenue rose 53% to $895 million and EPS of $1.40 beat the $1.33 estimate.
- U.S. daily users fell to 50.7 million, down 2.5 million from the prior quarter.
- Q4 revenue guidance of $1 billion to $1.03 billion came in below the $1.045 billion consensus.
- JP Morgan cut its target to $150 from $185, and Goldman Sachs cut its to $140 from $215.
Reddit (RDDT) stock fell 29% on Friday to close at $91.73. It had closed at $129.60 the day before, and it now sits well below its 52-week low of $119.27.
The drop followed the company’s third-quarter report, which showed a shrinking U.S. audience. CEO Steve Huffman blamed Google’s AI search features for cutting referral traffic.
The numbers themselves were solid. Revenue jumped 53% to $895 million, and U.S. revenue rose 50% to $719 million.
The collapse of Reddit will be studied.
After reporting earnings, its stock collapsed 30% in a single day.
It’s down 44% in 2 weeks.
But the most important detail is what was revealed in that earnings call.
The CEO said AI is killing Google search.
People no longer get sent… pic.twitter.com/eYhVF4Tknj
— Nic (@puckrin) October 31, 2026
Diluted earnings per share came in at $1.40. Wall Street had expected $1.33.
Users were the problem. U.S. daily users fell to 50.7 million, down 2.5 million from the second quarter. That is a 4.7% drop from the prior quarter.
Why Traffic Is Falling
Reddit splits its users into logged-in and logged-out groups. Logged-out users often arrive from Google searches and see fewer ads.
That group slipped 9% from the second quarter. Year over year, U.S. logged-out users fell 4%, while logged-in users rose 1%. U.S. daily users overall fell 1% from a year ago.
Global daily users still grew 12% from last year to 130.3 million. The weakness is concentrated in the U.S.
Huffman said search referrals dropped by more than 1 million a week in October. “People still want Reddit. It’s just Google is not sending them to Reddit the way they used to,” he said on the earnings call.
He added that Google is crawling Reddit as hard as ever. “The reality is the AI Mode does not drive traffic, not for us and not to anybody as far as I know,” he said.
The outlook did not help. Reddit guided fourth-quarter revenue to between $1 billion and $1.03 billion, below the $1.045 billion analysts expected.
The company also warned that Q4 daily users could fall by a “low double-digit percentage” if current Google trends continue. That was a hard line for investors to read.
Analysts Cut Targets
JP Morgan lowered its price target to $150 from $185, citing search traffic headwinds. Goldman Sachs went further, cutting to $140 from $215 on weaker referrals and fewer logged-out users.
Reddit has deals with Google and OpenAI that let their AI models train on its content. Those deals pay $60 million and $70 million a year, respectively.
Chief Operating Officer Jen Wong pointed out that 80% of monetization comes from logged-in and app users. Reddit says that group matters most for revenue.
Huffman said the company does not control Google’s choices. “We only control Reddit,” he said.
Reddit plans to require all users to create accounts and sign in to access the site. It hopes that move can shore up its user base.
Alphabet also had a rough week. Its stock lost almost $500 billion in market value after it reported slower search advertising growth, and GOOG fell 1.45% on Friday.
Reddit stock traded at $92.20 in after-hours trading on Friday, up 0.51%. Investors will watch whether U.S. logged-in users hold above 23.4 million and whether Q4 revenue reaches at least $1.0 billion when Reddit reports early next year.
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