❯ Reddit falls 29.27% as AI search traffic losses weigh on its fourth-quarter outlook

Strong results do not prevent a selloffReddit closed down 29.27% on October 30, U.S. time, its largest daily decline since its 2024 IPO. CNBC points to a weak fourth-quarter revenue outlook. Its earnings release reports third-quarter revenue of $895 million, up 53%, including $847 million from advertising. Fourth-quarter revenue is forecast at $1 billion to $1.03 billion.

Answers without a site visitDecrypt’s account of the earnings call says CEO Steve Huffman reported an average weekly decline of more than one million Google search referrals during October. He warned that daily users could decline by a low-double-digit percentage in the fourth quarter if the trend persists. AI search can summarize discussions directly, reducing the need to click through and affecting both discovery and return visits.

Licensing is separate from the advertising funnelReddit has data partnerships with Google and OpenAI, but licensing content is a different business from monetizing visits through advertising, which still supplied most quarterly revenue. The company plans fourth-quarter tests of a more logged-in experience in selected markets outside the U.S. By encouraging more people to log in and use Reddit directly, the company hopes to reduce its reliance on external search referrals.

▮ SIGNALAdvertising remains Reddit’s main revenue source, making direct visits especially important as AI search reduces clicks through to the site.