Key Takeaways
- Reddit shares fell 8% today after Snap reported just 4% ad revenue growth, in a broad tech selloff.
- Meta’s 26% revenue growth last quarter suggests advertisers are still spending on the biggest social platform, so Snap’s slowdown looks like Snap’s own problem.
- Reddit’s bigger risk is the search traffic it’s losing to AI answers on Alphabet’s Google, which is why its fourth-quarter guidance disappointed.
- The next big test for Reddit is its data-licensing renewal with Google, due in early 2027.
Reddit (RDDT) sank 8% today. A weak quarter from Snap and a broad tech rout hit a stock that was already reeling from its own disappointing outlook.
Snap’s ad revenue grew just 4% in the third quarter, and CEO Evan Spiegel said on its call that “advertising revenue growth remains below our ambitions.” That’s an ugly line for any ad-funded social app. But Meta Platforms (META), the biggest of them, is telling a different story. And Reddit’s real headache is still the traffic it’s losing to Alphabet (GOOGL).
Snap’s problem looks like Snap’s
Snap tied a drop in brand advertising to consumer packaged goods companies spending less. Meta isn’t seeing that. Its third-quarter revenue rose 26% to $64.6 billion, and it guided to $73 billion to $76 billion of fourth-quarter revenue. Meta shares are down 4% today, less than QQQ’s 6% drop.
Reddit’s own sales haven’t cracked either: revenue rose 53% to $895 million in the third quarter.
TIKR tracks 32 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
The bigger worry is Google
Last week, Reddit said its search referral traffic fell meaningfully in the third quarter. It also guided fourth-quarter revenue to $1.00 billion to $1.03 billion, short of what analysts expected. CEO Steve Huffman blamed AI Overviews and AI Mode in Google Search.
Those searches haven’t gone away. Alphabet’s third-quarter Search & other revenue rose 12% to $63.4 billion, and CEO Sundar Pichai said Google’s query growth was “the highest it’s been in the last five years.” Alphabet shares are down 2% today.
Analysts still expect Reddit’s revenue to keep climbing fast through 2028.
I don’t see Snap’s quarter changing those estimates much, because Reddit’s own fourth-quarter guidance still implies growth of roughly 38% to 42%. Google could change them. Analysts have already trimmed their 2027 revenue estimate to $4.34 billion, from $4.47 billion in late October.
Plenty of bad news is priced in
At its latest reading, Reddit traded at 11x forward earnings, against a 26x average over the past year and a high of 49x in January.
At today’s price, it’s even lower.
The way I see it, today’s drop has more to do with the Nasdaq than with Reddit’s ad business. Reddit’s revenue grew twice as fast as Meta’s last quarter. Google is the risk that matters, and the data-licensing renewal will show us how much leverage Reddit still has.
Of course, if the consumer-goods pullback Snap described spreads, Reddit’s next report would show it too.
So what is Reddit stock actually worth?
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Disclaimer:
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