Key Takeaways
- Reddit shares fell 29% on October 30 after the company warned Google’s AI search was cutting referral traffic, even though revenue jumped 53% to $895 million.
- CEO Steve Huffman said “the AI mode does not drive traffic,” and US daily users fell 2% to 50.7 million, the first decline since the IPO.
- Pinterest also sank on a weak forecast, while Reddit’s fourth-quarter guide of $1.00 billion to $1.03 billion implies growth slowing to 38% to 42%.
- The fourth-quarter report, expected in February, will show how far daily users fell and whether logged-in tests keep people engaged.
Reddit (RDDT) just posted one of the strongest quarters in social media. Revenue jumped 53% to $895 million, and net income rose 74% to $283 million.
Investors sold anyway. The culprit is Alphabet (GOOGL), whose AI Overviews and AI Mode now answer questions before anyone clicks through to a Reddit thread. Pinterest (PINS) sank the same morning after forecasting fourth-quarter revenue of $1.425 billion to $1.475 billion, below Wall Street estimates.
Reddit fell 29% on October 30, its biggest one-day drop since the IPO. That also left the stock at its lowest level in more than a year.
Both names were already weak in 2026. Reddit had fallen about 44% before its report, while Pinterest was down about 23%.
A blowout quarter with a crack
Reddit’s third quarter beat on nearly every financial line:
- Revenue rose 53% to $895 million, with advertising up 54% to $847 million.
- Diluted EPS reached $1.40, ahead of the $1.35 analysts expected.
- Free cash flow nearly doubled to $363 million, a 41% margin.
Growth is cooling, though. Revenue rose 61% in the second quarter. The fourth-quarter guide of $1.00 billion to $1.03 billion implies just 38% to 42%.
Here is how close Reddit is getting to a $1 billion quarter…
Even the low end of guidance would put it above that line for the first time.
The user numbers told a different story. Daily active uniques reached 130.3 million, short of the 133.7 million analysts expected. In the US, they fell 2% to 50.7 million, the first decline since the IPO.
Google holds the front door
Search referrals dropped by more than 1 million a week on average in October. CEO Steve Huffman was blunt about why, saying on the earnings call that “the AI mode does not drive traffic, not for us and not to anybody.”
So how has the market treated Reddit against its gatekeeper and its closest ad peer?
Reddit’s advertising revenue grew 54% last quarter, while Alphabet’s search revenue grew 12%. Still, Google decides how many logged-out visitors ever reach Reddit.
There’s an awkward wrinkle, too. On the day of the selloff, Reddit extended its cloud deal with Google through 2029, committing to spend $580 million over three years.
TIKR tracks 34 analysts on Reddit. How many say “Buy”?
See the full breakdown of Buy, Hold, and Sell ratings on Reddit, along with Wall Street’s revenue and earnings estimates, all in one place. More than 500,000 investors use TIKR to research stocks like this one. See Reddit’s Analyst Ratings
Betting on logged-in users
Reddit’s answer is to depend less on drive-by visitors. Huffman plans to require sign-ins for most content, which also deters data scraping. Testing starts in select international markets this quarter.
Management expects pain first because daily users could fall by a low double-digit percentage this quarter if referrals keep sliding.
The balance sheet buys time. Reddit held $3.03 billion in cash and securities at quarter end. It also had $660 million left on its $1 billion buyback.
Earnings kept climbing this year while the share price collapsed, and the multiple shows it.
The valuation now sits far below where it started 2026, so plenty of user damage is already priced in.
My take: Reddit still looks like a fast-growing ad platform with fat margins. A 29% one-day drop feels like an overreaction to one quarter of traffic data. However, a shrinking audience can’t support 50% growth forever, and Google controls the tap. I’d wait for proof that logged-in users stick before buying the dip.
The next checkpoint is the fourth-quarter report, expected in February. It will show how far daily users actually fell and whether the logged-in tests kept people engaged.
So what is Reddit stock actually worth?
TIKR lets you forecast the future price of any stock in less than a minute. Just enter a few assumptions into TIKR’s valuation model and see what Reddit could be worth. Start from Wall Street consensus estimates, or adjust the inputs to reflect your own view of the business. It’s free to use.
Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
