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Reddit (NYSE: RDDT) shares fell nearly 30% on Friday, October 30, 2026, after the social media platform reported weaker-than-expected user growth and issued a fourth-quarter revenue forecast below Wall Street estimates.
The stock traded around $90.21, down 30.4% during Friday’s session, putting it on course for its largest daily loss since going public in 2024.
- Reddit shares plunged approximately 30% on October 30, marking their biggest single-day decline since the company’s 2024 IPO.
- Google’s AI-powered search is reducing referral traffic, while Reddit warned that daily active users could decline by a low double-digit percentage in Q4.
- Reddit plans to introduce mandatory logins, initially testing the change in selected international markets before considering a wider rollout.
Reddit shares had already declined approximately 43% year to date before Friday’s selloff. The latest drop reflects growing investor concerns about the company’s dependence on external search traffic and its ability to convert user engagement into advertising revenue.
Google AI search threatens Reddit’s user growth
Reddit warned that Google’s AI-powered search results are reducing traffic to its discussion forums.
As Google increasingly provides answers directly within search results, fewer users click through to Reddit, weakening a major source of visitors.
The company indicated that daily active unique visitors could decline by a low double-digit percentage in the fourth quarter if referral traffic continues to deteriorate.
Investors are particularly concerned about the long-term implications. Lower search traffic could reduce advertising impressions, weaken user acquisition and limit revenue growth.
Reddit also faces uncertainty around its AI data licensing business. In July, the stock dropped more than 21% in a single session after the company failed to announce additional AI licensing agreements.
Reddit plans mandatory logins to protect user data
Reddit is preparing to require visitors to log in before accessing its forums. CEO Steve Huffman said the company will begin testing the restrictions in selected markets outside the United States during Q4 2026.
The initiative aims to increase registered-user engagement, strengthen advertising opportunities and limit unauthorised access to Reddit’s content by automated data scrapers.
However, restricting access could also discourage casual visitors, particularly those arriving through Google search results or shared links.
Reddit will assess the impact before deciding how broadly to introduce the requirements.
The company intends to continue licensing data to AI developers, including through agreements with OpenAI and Google.
Separately, Reddit has extended its cloud services agreement with Google through 2029, committing approximately $580 mn over three years.
Reddit stock valuation and price outlook
Following the selloff, Reddit trades at approximately 19.03 times forward earnings, compared with 8.48x for Pinterest and 7.53x for Snap, according to LSEG data.
The valuation premium suggests investors still expect Reddit to deliver stronger earnings growth than some competing social media platforms.
However, the decline in search referrals and uncertainty around user engagement could put additional pressure on that premium.
Reddit’s immediate stock price outlook remains negative following the disappointing results. A recovery will depend on whether the company can stabilise daily active users, improve advertising monetisation and demonstrate that mandatory logins do not accelerate traffic losses.
The broader market reaction also reflects weakness across consumer internet companies.
Roblox shares fell approximately 20% following its quarterly results, while Pinterest declined nearly 8% after missing revenue and earnings expectations.
For Reddit, the main question is whether declining search referrals represent a temporary disruption or a lasting change in how users discover online discussions.
A sustained recovery in RDDT shares will likely require evidence that Reddit can grow its registered audience and advertising revenue despite reduced dependence on Google search. Until that becomes clearer, earnings expectations and valuation remain vulnerable to further revisions.
Reddit Q3 2026 earnings disappoint on user growth and revenue outlook
Reddit’s third-quarter 2026 results disappointed investors as daily active unique visitors fell short of Wall Street expectations and the company’s fourth-quarter revenue guidance came in below analyst forecasts.
The earnings report also highlighted growing pressure on traffic from Google’s AI-powered search. As more users receive answers directly in search results, fewer visit Reddit’s discussion forums.
Management warned that daily active unique visitors could decline by a low double-digit percentage in Q4 if search referrals continue falling.
Reddit plans to test mandatory logins in selected international markets during the fourth quarter. The company expects the change to encourage registered-user engagement, improve advertising monetization and protect its content from unauthorized scraping.
However, investors are concerned that restricting access could further reduce traffic and weaken advertising growth.
The combination of disappointing user growth, weaker revenue guidance and uncertainty over search traffic triggered a selloff exceeding 30% during trading on October 30.
