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Reddit shares fell 23% in premarket trading on Friday, October 30, after the company warned about falling Google search traffic. The platform expects Google's growing use of AI search to affect website visits and future user growth.
The warning followed Reddit's third-quarter earnings report, which highlighted a major change in how people find online content. Google's AI Overviews and AI Mode now answer many questions directly on search pages. As a result, fewer users click website links to read detailed information.
Reddit CEO Steve Huffman said search referrals dropped by more than one million visits per week during October. The company recorded around 130.3 million daily active unique visitors worldwide in the third quarter.
However, daily active unique visitors in the US fell 2% year-over-year to 50.7 million. This marked Reddit's first yearly decline in US visitors since its 2024 stock market debut.
Reddit warned that its total daily active unique visitors could fall by a low double-digit percentage in the fourth quarter. This could happen if Google search traffic continues to decline.
Huffman also raised concerns about Google's changing search system. He said, "The reality is, the AI mode does not drive traffic, not for us and not to anybody."
Reddit now plans to make account logins necessary for viewing most of its content. The company wants to protect its large collection of discussions from data scraping. It also hopes to build stronger relationships with users instead of depending heavily on Google search.
However, this change could make it harder for new visitors to discover Reddit. People who previously opened Reddit discussions through Google may face additional steps.
Despite these concerns, Reddit reported strong third-quarter financial results. Its revenue increased 53% year-over-year to USD 895 million, beating analyst expectations. However, its fourth-quarter revenue forecast of USD 1 billion to USD 1.03 billion fell below market expectations.
The decline in Reddit shares also highlights a growing challenge for websites. Google's AI search can provide answers without sending visitors to other platforms. This shift could affect advertising income and user growth across the internet.
Reddit's next challenge will involve protecting its content while attracting new visitors. Its decision to limit access could shape how the platform grows in an AI-driven search market.
Also Read: Reddit Launches ‘For You’ Feed: A New Way to Discover Posts