Reddit shares fell 29% to $91.73 on Friday, their biggest one-day drop since the company went public, erasing more than $7 billion in market value. CEO Steve Huffman linked declining search referrals to Google’s AI-powered search experience, as publishers, travel sites and image platforms report similar pressures. The developments have renewed investor focus on internet businesses that depend on search to reach users.
Google’s AI search is changing referral patterns
Google is answering more queries directly through AI Overviews and its conversational AI Mode, potentially reducing clicks through to external websites. On October 29, Huffman said Google continued to crawl Reddit frequently, but referrals from search were falling. He said Google search was sending Reddit more than 1 million fewer visits per week in October, adding that AI Mode was “not driving traffic.”
Search engines have long been an important way for users to discover Reddit’s community discussions. When answers appear directly on the search results page, Reddit may find it harder to turn search users into site visitors, even if its content remains indexed by Google. Reddit has attributed the traffic decline to changes in AI search, though the available information does not specify how the impact varies by content category or user source.
User growth warning contrasts with 53% sales growth
Reddit warned that daily active users could decline by a low double-digit percentage this quarter, implying a reduction of at least about 13 million users per day. At the same time, sales rose 53% to $895 million. The contrast has put the focus on whether growth can continue and whether fewer visits could affect the platform’s advertising and monetization prospects.
The share-price reaction reflects the importance investors place on Reddit’s user growth outlook. But one day’s decline does not, by itself, show how much the traffic shift has affected revenue. The company’s sales growth and its warning on users will need to be assessed alongside subsequent operating results.
Other platforms also report search pressure
Reddit is not alone in pointing to changes in Google-driven traffic. People Inc., Tripadvisor, Pinterest and Chegg have reported similar pressure across publishing, travel, image content and education. Each relies on search to reach users, and AI-generated answers on Google’s results pages may alter the path from a search query to a visit to an external site.
Alphabet also lost about $500 billion in market value on Thursday. Investors are looking beyond traffic fluctuations at individual platforms to consider whether AI search could reshape how traffic is distributed between search advertising and outside websites. For Reddit, the key questions are whether its daily active user warning materializes and whether revenue growth can continue as search referrals decline.